A sales surge is seen as key to stabilising prices
As New Zealand’s housing market faces a record high in property listings and hesitant buyer activity, experts say it will take a substantial surge in sales to clear the backlog and spark a meaningful price recovery.
October marked the eighth consecutive month of price declines, with CoreLogic reporting a 0.5% dip from the previous month. ANZ Bank noted that with transaction volumes at a low and sale times extending, the market remains in a holding pattern, with little movement expected until 2025.
“A sustained increase in house prices will require a meaningful lift in sales volumes to clear the backlog of listings in the market,” ANZ’s chief New Zealand economist Sharon Zollner said, adding that while prices could stabilise around year-end, any real recovery may not appear until 2025.
Buyers remain cautious amid economic headwinds, including stalled growth and rising unemployment, even though the Reserve Bank of New Zealand (RBNZ) has lowered the Official Cash Rate by 75 basis points since August.
Although advertised mortgage rates have softened, banks are still applying a test rate of approximately 8%—higher than the current one-year fixed mortgage rate of around 6%—which limits the borrowing capacity for some prospective buyers.
Kelvin Davidson, CoreLogic New Zealand’s chief property economist, noted that declining borrowing costs could signal an approaching floor in property values, though the recovery could take time: “Rising sentiment may take some time to hit the ‘hard data,’ but there’s a sense that the end could be in sight for the recent downturn,” he said in a Bloomberg interview.
Meanwhile, Auckland’s property market faces added strain from a steady influx of new builds, with recent industry reports pointing to a potential oversupply of townhouses. New builds currently make up around 25% of listings in the city.
Banks have felt the pinch as well, as low lending growth has driven them to review test rates more frequently amid rising competition to attract creditworthy borrowers, according to RBNZ. Despite these efforts, overall market demand remains low, leaving analysts sceptical of any imminent turnaround.
Zollner suggested that while the market may hover around current price levels in the short term, it would require a noticeable tightening in inventory to initiate meaningful gains.
“Prices may bounce along the bottom for a few months yet,” Zollner said.
