House prices do not yet reflect the marked increase in consumer confidence following recent interest rate cuts.

On the contrary, the latest QV House Price Index shows values decreased nationally by an average of 2% throughout the three months to the end of August – a fraction of a percentage point more than in the July quarter.

The average home is now worth $905,357, which is almost exactly the same as at the start of the 2024 calendar year.

Home values in Tauranga are now just 0.5% higher on average than at the same time last year.

It follows another quarter of negative growth, with the city’s average home value reducing by 1.5% to $1,015,296.

This includes a small average decline of 0.4% during the month of August, marking three consecutive months of declines.

“Home values have continued to slowly ebb and flow throughout the first eight months of 2024, but they are now effectively flat overall for the calendar year,” said QV operations manager James Wilson.

“This is reflective of a housing market that has been severely constricted by strong economic headwinds – including rising unemployment, credit constraints and, of course, high interest rates.”

“Now that interest rates are finally coming down, we are seeing renewed interest in housing generally across the country. However, this won’t necessarily translate into home value growth while there’s such an excess of stock available for sale. Values will tighten again when prospective buyers aren’t as spoilt for choice as they are currently, which could take a while,” he added.

In the meantime, Aotearoa’s largest cities experienced the largest average home value declines this quarter. Home values in Auckland and Wellington reduced by 2.8% and 3% respectively, with the former recording its seventh consecutive month of negative growth. Hamilton (-1.7%), Tauranga (-1.5%), Christchurch (-1.3%) and Dunedin (-1.1%) also recorded modest quarterly home value reductions in August.

“An abundance of real estate listings – especially in and around our largest cities – is expected to keep a firm lid on home value growth, even as increasing numbers of buyers start coming out of the woodwork as we move into spring. Their prevailing mindset now seems to be one of cautious optimism, that we’re almost through the worst of it and now is a good time to see what’s happening out there in the market,” said Wilson.

“Of course, we also expect to see even more real estate listings in the months ahead, as spring is traditionally when the real estate selling season starts ramping up again. More investors will look to sell properties following the changes to the bright line test back in July, and sellers who pulled their listings after trying and failing to sell earlier in the year may even look to try again now that there’s an uptick in activity and a general sense that confidence amongst buyers is increasing.”

Wilson said this would continue to promote soft-to-flat value conditions nationally in the short term. “Spring has sprung and interest rates are coming down – but don’t expect to see house prices suddenly take off again soon,” he concluded.