CoreLogic provides an overview of New Zealand's housing market
CoreLogic NZ’s February report showed falling mortgage rates may boost New Zealand’s residential market.
The easing of mortgage rates, along with anticipated further cuts, has sparked an increase in activity among seasoned investors and “movers.”
According to the latest insights from CoreLogic NZ’s February Housing Chart Pack, mortgaged multiple property owners (MPOs) accounted for 24% of property purchases in January, while “movers” made up 28%.
This marks a substantial engagement from investors, reaching levels not observed since 2021.
Financial incentives boost investor activity
Kelvin Davidson (pictured above), chief property economist at CoreLogic NZ, highlighted the impact of financial incentives on investor behaviour.
“Investors, in particular, have certainly started to return at levels not seen since 2021,” Davidson said. “Falling mortgage rates have been a key factor, significantly reducing the income top-ups typically required to sustain cashflow on recent rental property purchases.”
Additionally, investors have benefited from last year’s easing in loan-to-value ratio (LVR) restrictions and upcoming changes to interest deductibility rules.
First-home buyers and regional trends
While the market share for first-home buyers (FHBs) slightly decreased from 26% in the last quarter of 2024 to 25% in January, they remain active, especially in regions like Hamilton and Wellington.
Meanwhile, a recent survey by mortgages.co.nz and Tony Alexander shows that 52% of advisors noted an increase in first-home buyer activity, up from 26%, driven by lower interest rates boosting market optimism.
Davidson remains optimistic about their continued influence in the market.
“We expect this group to maintain a strong market presence in 2025, as overall deal volumes rise, even though their share of activity may dip a bit,” he said.
Economic factors and future outlook
The easing of the OCR, following the Reserve Bank’s decision on Wednesday to reduce it by 50 basis points to 3.75%, and more accommodating credit conditions suggest that mortgage terms could become even more favourable in the upcoming months.
“All in all, 2025 could see a subdued upturn for the property market, with values nationally rising by around 5%,” Davidson said.
Market highlights and projections
CoreLogic’s February Housing Chart Pack also sheds light on broader market conditions:
- New Zealand’s residential market is currently valued at $1.61 trillion.
- The CoreLogic Home Value Index indicates a slight decline of 0.1% in property values in January, with a year-over-year decrease of 4.3%.
- Listing volumes have risen significantly, with total listings in January up by 25% over the five-year average.
- Rental market growth has stalled, with the slowest pace of rental increase since 2022 and gross rental yields at 3.9%, the highest since early 2016.
- Approximately 71% of New Zealand’s mortgages are fixed but are due to reprice within the next year, indicating potential shifts in borrowing costs.
As mortgage rates continue to adjust and regulatory environments evolve, the New Zealand property market is positioned for gradual growth, influenced by both domestic economic policies and global economic conditions.
