NZ's residential market revives with rate cut effects, CoreLogic reports
Amidst evolving mortgage rate wars and a recent uptick in property values, New Zealand’s residential market is poised for a subtle revival in 2025.
New dynamics in borrowing trends
Recent data from the Reserve Bank (RBNZ) suggests a significant shift in the borrowing landscape. In January, nearly one-third of owner-occupiers opted for floating-rate options for their new mortgage commitments, jumping from 23.5% in December to 31.8%.
This shift was primarily driven by RBNZ’s recent rate cuts, including its February 50-basis-point reduction, which has spurred a series of mortgage rate decreases, the most recent being from ASB.
RBNZ move is starting to positively influence both market activity and property values.
According to CoreLogic NZ's latest insights, only a small fraction of borrowers opted for longer-term fixed rates in January, with the vast majority choosing shorter terms or floating rates.
However, Kelvin Davidson (pictured), chief property economist at CoreLogic NZ, noted a potential change on the horizon.
“The emergence of rate wars has introduced more competitive longer-term fixed rates, which may soon encourage a shift in borrower preferences,” Davidson said.
Market equilibrium maintained
Despite these changes, Davidson said that the market balance between buyers and sellers remains stable.
“With an increase in property listings—the highest for this time of year since at least 2018—buyers are not under pressure to rush their decisions,” he said.
This environment benefits both residential buyers and investors, as the lower rates render property purchases more accessible without the need for substantial additional income sources.
Echoing this, the latest NZHL Property Report by economist Tony Alexander highlighted a buyer-favourable market despite increased activity.
Positive outlook for 2025
The property market is showing signs of a gradual recovery, with the CoreLogic Home Value Index marking a modest increase in February.
“We are witnessing the initial signs that the downturn in property values is reversing, with a national potential rise in property values around 5% expected this year,” Davidson said.
Key urban centers like Christchurch and Dunedin are leading this growth, with even the previously sluggish Wellington market experiencing gains.
Highlights from CoreLogic’s March 2025 Housing Chart Pack
The comprehensive report sheds light on various aspects of the market:
- New Zealand’s residential real estate market is now valued at $1.64 trillion.
- Total property sales over the past year reached 82,757.
- Listings surged in February, standing 26% above the five-year average, though regional variations exist.
- Rental market conditions continue to favor tenants, supported by easing net migration and a high number of available listings.
- Gross rental yields have climbed to 3.9%, the highest since mid-2015.
- Inflation remains within the target range, suggesting potential further OCR cuts.
“This year marks a pivotal moment for New Zealand’s property market as it begins to stabilise and show signs of upward movement,” Davidson said.
Access the CoreLogic report here.
