Explore the five crucial trends impacting New Zealand's housing market
As we move into 2025, New Zealand’s housing market shows a divergent pattern, with several cities experiencing price adjustments.
Kelvin Davidson (pictured above), chief economist at CoreLogic, outlined in a OneRoof article the key developments over the past week that are shaping the market.
Nationwide property value trends
CoreLogic’s latest data revealed a nationwide median property value decrease of 0.2% in December, marking the ninth decline in monthly values since March 2024, with the exception of a stable October.
This trend caps off a year characterised by slight declines driven initially by high mortgage rates and more recently by a weakening labor market.
“December’s soggy result nicely summed up 2024 as a whole,” Davidson said.
Nonetheless, there's a silver lining as regions like Hamilton, Tauranga, and Dunedin are witnessing slight increases, indicating potential stabilization in the market.
Persistent weakness in major markets
Despite some positive signs, Auckland and Wellington continue to struggle.
December saw Auckland's median property values decrease by 0.4% and Wellington's by 0.8%, with both cities remaining significantly below their post-COVID peaks.
The surplus of available properties and the economic fallout from public sector cuts have particularly dampened Wellington’s market.
Mortgage market dynamics
Recent mortgage data from the Reserve Bank highlighted interesting shifts; notably, the proportion of floating rate mortgages increased from 11% in October to 14% in November, reaching its highest point since mid-2020.
This suggests that borrowers are anticipating opportunities to lock in lower rates soon, reflecting a strategic approach to potentially declining mortgage costs.
Investor activity under the microscope
Investor behaviour is also in focus, with CoreLogic set to release its Buyer Classification data for December.
Davidson expressed particular interest in tracking the activities of mortgaged investors.
“I’ll be watching closely...will be trends for mortgaged investors,” indicating a possible resurgence in investor engagement in the market, he said.
The outlook for 2025
Looking forward, Davidson predicts a complex interplay of market forces for 2025, suggesting a modest overall increase in property values of around 5%, OneRoof reported.
This forecast acknowledges the balancing act between lower mortgage rates and ongoing labor market challenges, which could temper any significant growth in home values.
Challenges and opportunities for the NZ property market
The start of 2025 brings with it both challenges and opportunities within New Zealand’s housing market.
With certain regions showing resilience and others facing continued pressures, stakeholders are keeping a close eye on evolving trends that will define the market’s direction in the coming months.
Read the OneRoof report here.
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