This follows its lack of movement as interest rates fell in the last months of 2024
The prices of homes in New Zealand may possibly see a modest recovery in 2025, according to property agency CoreLogic New Zealand, as reported in an article by Bloomberg.
According to CoreLogic’s report, house prices last year fell 3.9%, with values falling to 0.2% in December, continuing the streak of 10 consecutive months of decreases.
In the first months of 2024, prices saw a modest rise but the optimism among buyers did not continue because of the sustained high borrowing costs and the stalled economic growth. When the official cash rate was eventually cut by the Reserve Bank of New Zealand (RBNZ) around August, the market was then filled with homes for sale, with values continuing to go down.
Kelvin Davidson, chief property economist at CoreLogic in Wellington, said that he suspected that 2025 may see conflicting forces in the country’s housing market, which may result in a subdued upturn in both sales volumes and property values.
“Our expectation is that values could increase by around 5% across New Zealand as a whole,” said Davidson.
Notably, the cheap borrowing costs in 2020 drove house prices to increase by 16% and 26% in 2021. Despite economists expecting that the RBNZ will eventually decrease the official cash rate to around 3% later this year, the number would still be far from the 0.25% recorded back in 2020 while the economy was enduring the impact of the COVID-19 pandemic.
According to Davidson, people will be more encouraged to return to the property market and raise prices by the lower mortgage interest rates as well as the lowest internal serviceability test rates that banks used to assess credit risk.
However, Davidson added that with the economy still being relatively weak, prospective buyers will still be concerned by job security as the levels of the listings on the housing market was still high.
