What does this tell us?
Property prices are more likely to be stable in undervalued areas.
And house values will probably take off more quickly in these regions, too – once we hit the recovery.
In comparison, values will likely fall further in the overvalued areas, like the Wider Wellington region.
Similarly, prices will likely remain depressed for longer in these overvalued regions than in undervalued areas.
Where looks good and where looks bad?
Canterbury and the top of the South Island appear to be the most undervalued.
Whereas Wellington, Manawatu-Whanganui and Waikato look most overcooked.
And this “over/undervalued” diagnosis actually works in the real world.
Look at the North Island. Taranaki appears to be the most reasonably priced (compared to where we’d expect prices to be).
So it’s not surprising that prices there have remained stable, while property prices in the neighbouring regions have slid.