The CoreLogic Home Value Index fell by a further 0.5% in August, taking the total drop since February’s ‘mini peak’ to 3.7%. Values remain around 17% lower than the cyclical high-point from around 2½ years ago, but still about 17% above pre-COVID levels. Apart from Christchurch (up by 0.2%), there were falls in values across each of the main centres in August, with Auckland dropping by another 1.0% (taking its fall since a peak in January to 6.0%) and Hamilton by 0.8%. The falls in Tauranga, Dunedin, and Wellington were more modest at less than half a percent over the month. Generally speaking, although mortgage rates are now falling, values are still being held back by elevated levels of listings and the weakening labour market.

Turning to rents, the pace of growth continues to slow, as net migration eases down from its very high peak, and the stock of available rental listings on the market rises. There’s also a constraint on how much further they can rise, given that the level of rents is already high in relation to households’ incomes, and of course wage growth is now slowing too. To be fair, rents aren’t falling to any meaningful degree. But the previous rises have certainly petered out.

Over the past 2-3 years, gross rental yields have been trending slowly higher, as values have weakened and rents have risen. From a floor of 2.8% in late 2021, they now stand at 3.8%, which is the highest level since around mid-2016. Auckland and Wellington City are hovering at around the 3% mark, with Hamilton and Tauranga closer to 4%, and Christchurch and Dunedin a bit above 4%. Even though rental yields have trended higher, they’re still quite low compared to mortgage rates, so no doubt some would-be property investors are watching and waiting for interest rates to start falling to a more favourable level.