CoreLogic sees signs of recovery amidst challenges
In the first months of 2025, New Zealand’s housing market is beginning to display signs of a potential recovery, according to CoreLogic’s latest monthly property insights.
The final months of 2023 and early 2024 saw a slight uptick in property values, but overall confidence in the market remained low due to high mortgage rates and a sluggish labour market.
However, with recent reductions in mortgage rates, the dynamics seem to be changing, setting the stage for a gradual improvement in property values, said Kelvin Davidson (pictured), CoreLogic chief economist.
According to CoreLogic NZ’s February report, the residential market has seen a revival, spurred by the easing of mortgage rates. Investor and mover activity has surged, with mortgaged multiple property owners (MPOs) and movers accounting for 24% and 28% of January’s purchases, the highest since 2021.
Stabilising property values
According to CoreLogic’s Home Value Index, national median property values in January barely moved, dropping just 0.1% – marking five consecutive months of minimal fluctuations and suggesting that the market may be nearing a bottom.
While cities like Hamilton saw a modest increase of 0.5%, others like Wellington experienced a decline due to economic pressures, including public sector cutbacks.
Sales volume and property prices: A cautious optimism
Despite the hopeful signs, several factors urge caution.
Housing affordability remains a concern, with prices not being “cheap” in absolute terms despite being lower than their 2021 peak.
The market also faces a high volume of listings, giving buyers leverage over property values.
The introduction of debt-to-income ratio restrictions adds another layer of complexity, although they have yet to become a binding constraint on borrowing.
The path ahead
The housing market in New Zealand is witnessing a recovery, with residential property sales rising from 59,000 in mid-2023 to nearly 71,000 currently.
Economist Tony Alexander noted that the Reserve Bank’s recent cut in the OCR to 3.75% should support further market growth, although price gains have remained modest at an average of 2.5% since mid-2023.
Looking ahead, sales volumes are forecasted to increase from about 80,000 last year to 90,000 in 2025, with national average values expected to rise by approximately 5%.
However, Davidson said these improvements might be modest by historical standards, which could disappoint those seeking significant capital gains.
Nevertheless, the current lower price levels and falling mortgage rates present an opportunity for first-time homebuyers and new investors.
Additionally, the mobility of existing homeowners is likely to increase as market confidence gradually returns.
Overall, the New Zealand property market in 2025 presents a cautiously optimistic outlook, with signs of recovery tempered by ongoing economic and policy challenges.
Visit this NZFSG webpage to read the full CoreLogic insights.
