CoreLogic says there are opportunities amid challenges
As 2025 approaches, New Zealand’s property landscape is marked by a combination of promising developments and ongoing challenges.
CoreLogic NZ’s latest report highlighted the interplay between reduced mortgage rates and persistent market hurdles such as affordability issues and a fluctuating labour market.
Mortgage rates and market dynamics
Kelvin Davidson (pictured above), chief property economist at CoreLogic NZ, noted the dual impact of decreasing mortgage rates and debt-to-income (DTI) ratio caps on New Zealand’s property market.
While lower rates may bolster sales and stabilise property values, Davidson cautioned, “Lower mortgage rates will support sales activity and help stabilise property values, but affordability constraints, elevated listings, and a soft labour market will remain key challenges.
“DTI restrictions may also start to influence buyer behaviour, adding further complexity to the market outlook next year.”
He predicted a modest recovery, expecting property sales volumes to increase by 10 to 15% and national values to rise by about 5%.
Current market conditions
November saw a 9% increase in property sales from the previous year, continuing an 18-month trend of growth. However, sales are still about 10% below the seasonal norm, reflecting cautious buyer sentiment.
The increase in total listings to 30,150 in November suggests a buyer’s market.
“The volume of listings on the market is providing buyers with time to negotiate and secure deals on their terms, but sales remain constrained by affordability and confidence factors,” Davidson said.
Regional variances and first-time buyers
New Zealand’s property market’s performance varies significantly across regions, with Wellington, Auckland, and Hamilton seeing declines, while Christchurch and Dunedin show modest gains.
First-time buyers remain active, representing 25.5% of November’s property purchases, benefiting from lower prices and reduced competition.
Rental market trends
The rental sector is experiencing a slowdown, with annual growth settling at 1%, well below the long-term average. Rents in Auckland have remained static, while Dunedin has seen a significant increase. Davidson noted a softening rental demand.
“Rents are already high in relation to household incomes, so a slowdown was always likely at some stage,” he said. “But subdued rental demand owing to a slowdown in net migration and more available listings on the market are also adding to the slowdown too.”
Looking ahead
With diverse regional trends and fluctuating market dynamics, New Zealand’s property market in 2025 presents a complex picture.
The abundance of listings will offer significant choice for buyers into the new year, but realistic pricing will be crucial for sellers aiming for timely transactions.
As the economic landscape evolves, stakeholders will need to navigate the intricacies of a market influenced by both domestic conditions and broader economic factors, CoreLogic reported.
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