New Zealand property market sees uptick in values amid economic shifts
March witnessed a modest increase in property values across New Zealand, marking a positive shift after a stagnant January and a slight uplift in February.
With a +0.5% rise in March following a +0.4% in February, signs point to a budding recovery phase.
CoreLogic: Steady recovery as values rise
The CoreLogic Home Value Index recorded its strongest rise since the previous year, with property values reaching $812,195, the highest since June 2024. However, values remain 16.3% lower than the peak in January 2022, underscoring the market's gradual recovery rather than a swift rebound.
Wellington and Auckland record gains, others subdued
While Ōtepoti Dunedin and Tauranga showed more subdued activity, other major centers like Te Whanganui-a-Tara Wellington and Tāmaki Makaurau Auckland experienced noticeable gains, with increases of +0.3% and +0.6% respectively.
Recovery tempered by new lending caps
Kelvin Davidson (pictured) of CoreLogic NZ contextualised the recent data as part of a broader recovery, driven by past declines in mortgage rates and a gradual improvement in economic conditions.
“The falls in mortgage rates since around July or August last year were always going to take a little bit of time to flow through to house prices, given the weak economic environment and subdued household confidence,” Davidson said.
He noted that an abundance of listings and the persistence of higher fixed interest rates from previous years temporarily restrained property values.
However, Davidson added, “But the lags have now worked their way through the system and, with signs that the economy has started to turn a corner, confidence is returning to the property market.”
Supporting this outlook, a recent Trade Me survey indicated that New Zealand's property market buyer confidence is at its highest in two years, with 61% of respondents believing it's a good time to buy.
Despite this positive trend, Davidson cautioned against expecting a booming market due to new lending restrictions like debt-to-income ratio caps.
Challenges and opportunities: The path ahead
The CoreLogic report suggested that while the market shows signs of recovery, significant challenges remain. High listings and ongoing economic uncertainty are limiting factors, but lower interest rates provide a cushion.
As the economy shows signs of improvement, consumer confidence in the property market is returning, albeit cautiously.
Moderate optimism for 2025
CoreLogic expects New Zealand’s property market to achieve a steady recovery with national property values rising around 5% this year, a forecast echoed by a Reuters poll that also anticipates a modest rebound in 2025 driven by falling interest rates.
This growth is seen as sustainable and necessary for a market still recovering from past excesses and adjusting to new regulatory environments.
Read the CoreLogic announcement and access the full April HVI report.
