The tide may be turning on tumbling property values after three analysts all judged fresh real estate data shows a “possible floor in [house] prices is approaching”.

New reports from OneRoof, CoreLogic and ANZ Bank point to potentially better times ahead for homeowners, despite interest rates likely staying higher for longer.

Today’s latest OneRoof-Valocity House Index showed New Zealand’s average property value fell 2.3 per cent ($22,000) to $950,000 in the three months to the end of May, as successive interest rate rises put downward pressure on prices.

Auckland’s average value fell a further 3.2 per cent ($43,000) over the quarter to $1.29 million, but there were some bright spots with Northland, Otago and West Coast enjoying lifts in their average property value, while the rate of decline slowed in Canterbury, Taranaki and Wellington.

CoreLogic, in its own data released this morning, said property values fell nationwide in May but the rate of change had eased.

The 0.7 per cent fall in May was “tentative evidence” the downturn was winding up, CoreLogic said.

Average values were 10.2 per cent down on a year earlier, but still well above pre-lockdown levels in March 2020.

CoreLogic NZ head of research Nick Goodall said indicators such as moderating house price declines and the latest Reserve Bank Official Cash Rate (OCR) forecasts were positive signs for homeowners.

“While the OCR is at a relatively high level of 5.5 per cent following a total increase of 525 basis points over the last 20 months, this expected ceiling for interest rates reinforces our view that a possible floor in prices is approaching,” Goodall said.

Earlier this week ANZ Bank New Zealand dialled back its expectations for house prices to keep heading south, predicting a relatively sharp turn in the near term.

The country’s biggest lender is now forecasting a 1.6 per cent quarterly increase in each of the September and December quarters, having previously predicted a 0.4 per cent decline in the September period followed by a 0.4 per cent increase in December.

That means ANZ’s economists forecast annual house prices to increase 0.1 per cent in the December quarter, an earlier turnaround than June 2024 quarter increase predicted just last month.

ANZ said the Reserve Bank of New Zealand’s muted response to the fiscal impulse in the Budget surprised its economics team, who had expected looser monetary policy than they’d previously predicted.

“In short, housing tailwinds now appear to be blowing a little stronger than the headwinds. But we’re not convinced the RBNZ will be able to let that run,” the ANZ economists said in their property focus report.

“We expect the RBNZ will need to tighten monetary conditions later in the year once all has been revealed in the data.”

CoreLogic's head of research Nick Goodall. Photo / Supplied

NZ Mortgages managing director Nathan Miglani said if the interest rate peak had not already been reached, the country was getting very close to it.

“We anticipate rates beginning a gradual descent from late 2023, so our general advice is to fix for a short term where possible, say one year or 18 months,” Miglani added.

“With interest rates likely to fall, fixing for a long term could mean a hefty breakage cost if circumstances change and you need to restructure early.”

Some buyers believed rates had already peaked, and were now making decisions based on the idea rates will go down, Miglani said.

“Despite the doomsday property market stories many Kiwis are hearing, average asking prices are still above what they were before Covid-19, and this should be viewed as good news for property owners concerned about shrinking equity,” he added.

There are still forces pulling against property values, however.

New listings coming onto the market were at a 16-year low this autumn, plunging to almost the same levels as seen during the 2020 lockdown.

New property listings are at a low. Photo / 123RF

OneRoof’s report highlighted continued uncertainty in the country’s biggest housing market with a 3.2 per cent decline in Auckland over the last quarter - a signal that house prices in that region have still a way to go before they hit the bottom.

Nationwide sales volumes in the three months to the end of May were down nearly 38 per cent year-on-year.

OneRoof editor Owen Vaughan said the drop in new listings volumes was having a draining effect on the market, with only two regions, Taranaki and Southland, recording an annual increase in May.

“Nationwide new listings in May were down 12 per cent on the month before and down 21 per cent year-on-year. The drop-off in new stock coming to market was steepest in Wellington, with new listings in the region down 41 per cent year-on-year. In Auckland, the reluctance to list is hitting overall stock numbers. Total listings for the region are down nearly 4 per cent year-on-year,” Vaughan said.

“Falling house prices and falling sales have kept vendors on the sidelines throughout autumn and will need a turnaround in both to entice them back into the market.

“Market conditions remain positive for buyers, though, with prices now hitting the bottom, or at least very close to the bottom, especially for entry-level properties. The lack of competition from investors and the news that rates have peaked suggest this is as about as good as it is going to get for first-home buyers.”

Goodall said a peak in the cash rate would offer more comfort and certainty to Kiwi borrowers of almost half all existing loans by value.

“Mortgage holders and aspiring homeowners should now be able to quantify the worst-case scenario for their mortgage repayments which will give both them and their bank confidence in assessing serviceability test rates,” he said.

“It seems the majority of borrowers are well placed to adjust to the higher repayments likely due to growth in wages and reduced spending elsewhere,” Goodall added.

“More vulnerable sectors are likely to include first-home buyers who purchased around the peak of the cycle who haven’t had the benefit of time to accrue equity in their home or a savings buffer, along with lower-income households where balance sheets are likely to be more thinly stretched.”

The latest Centrix credit indicator report covering April showed home loan arrears declined for the first time in eight months.

Missed mortgage repayments fell to 1.27 per cent of the active population, down from 1.31 per cent in March, with 19,000 mortgages reported past due. They still remain below pre-Covid levels when they were 1.35 per cent in December 2019.

However, mortgage arrears have risen 25 per cent when compared with April last year.