Monthly Property Insights

The Cotality Home Value Index rose by 0.2% again in March, following the same scale of growth in February. This run of two consecutive increases (albeit modest) could potentially signal that the market trend has changed a little – and would be consistent with the falls in mortgage rates since mid-2024 and better news from the economy in the latter stages of 2025 and early part of 2026. Of course, the Iran conflict is throwing an extra layer of uncertainty over everything at present.

A quick regional review

There’s still a degree of patchiness across the country, for example Hamilton and Wellington both dipped by a minor -0.1% in March, while Tauranga and Auckland were flat. By contrast, Christchurch was up by 0.6% and Dunedin by 0.7%. Elsewhere, areas such as Palmerston North and New Plymouth only edged higher (0.1% apiece), but Napier was up by 0.7%, Gisborne 0.8%, and Invercargill by 1.7%.

The shape of the economy is telling us a lot at the moment. Indeed, given that the services sector has been sluggish lately but agriculture faring very well, it’s no surprise that many ‘provincial’ areas (especially in the South Island) are seeing a degree of resilience in property values, yet bigger centres such as Auckland or Wellington are still subdued.

Iran, oil, inflation, and uncertainty

Of course, even though there wasn’t a clear and obvious impact from the Iran conflict on property values across the country in March, it was still very early days and the war puts a whole new level of uncertainty into the mix – both for the economy and housing market.

The key question is ‘how long it lasts’, which at this stage nobody knows. There will certainly be an inflationary effect in the near term (which in fact has already happened via higher petrol and diesel prices), but the Reserve Bank doesn’t seem inclined to react straightaway with a higher official cash rate, partly because the conflict will also tend to dampen the economy down the track.

Of course, global uncertainty has seen wholesale interest rates go up and that has flowed through to some mortgage rates here. And if inflation does become more embedded and longer lasting, there’s clear, further upside risks to mortgage rates. 

The housing recovery could be delayed again

Either way, whether we get higher interest rates or a weaker economy – or both – the headwinds for house sales and property values seem to be building again.

Indeed, arguably the missing piece in the housing market lately has been a confidence factor, and now, in light of the Iran conflict and sharply higher fuel prices, it’s difficult to see market sentiment or property values lifting sharply further in the near term. The modest upturn in February and March could in fact easily go into reverse again.

Of course, that’s great news for first home buyers and also any aspiring new property investors, or at least those that can secure the finance and feel confident about their jobs and incomes.

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