The index analyses how an economic downturn or change in market conditions may impact property in different parts of the country.

It takes into account a broad range of important economic and housing measures. Weightings are allocated based on their potential influence on future property market performance and this provides an indicative assessment of an area’s performance as a result.

CoreLogic research head Nick Goodall says it is not intended as a forecast of values; instead a relative assessment of each area’s risk in the event of a more significant downturn in the property market.

The six categories include data on housing affordability (25%), Centrix credit reporting (20%), investor activity (15%), demand/supply rebalance (15%), Stats NZ local employment and economy data (15%) and Trade Me Property demand data (10%).

Goodall says the index highlighted Ōtorohanga and Mackenzie as the two most vulnerable territorial authorities while Waimakariri and Tīmaru appear to be least vulnerable.

Of the six main centres, Auckland is most vulnerable and Christchurch least vulnerable.

“There are a broad range of factors which will influence the future performance of the property market and these will vary in their relevance from region to region.

“The results show many of the country’s most vulnerable markets are smaller centres located in the central North Island. The upper South Island and Canterbury regions look less vulnerable than most of the rest of the country.

“It’s also important to note the areas expected to underperform may not necessarily see values fall; but in relative terms they face the greatest economic risks which makes them more vulnerable to a downturn.”

CoreLogic chief property economist Kelvin Davidson says the country’s housing market has been in a significant upswing phase for more than a year.

“Following the 2020 lockdown, confidence rebounded, unemployment fell, mortgage rates were cut, and deposit requirements eased, alongside other official measures which played a role in the strong performance of the housing market.”

He says nothing can go up forever and the already stretched position for housing affordability nationwide has further deteriorated in the past year.

The Government and RBNZ have introduced various measures to try and curb skyrocketing housing values, which alongside rising mortgage rates should prove a strong headwind to price growth.

“Should average annual property value growth fall to 1-2% across the regions, which is what we’re currently seeing in monthly growth, there will be some areas above that figure and some below – potentially with values actually falling as we move into the next phase of the cycle,” says Davidson.

CoreLogic Property Vulnerability Index