Prices rose modestly in early 2024 but buyer optimism wasn’t sustained. — Bloomberg
WELLINGTON: New Zealand house prices may show a modest recovery this year after failing to respond to falling interest rates in the final months of 2024, according to CoreLogic New Zealand.
Prices fell 3.9% last year, the property agency said in data published late last week.
Values fell 0.2% in December for their tenth straight monthly decline, the report showed.
Prices rose modestly in early 2024 but buyer optimism wasn’t sustained, as the central bank kept borrowing costs high and economic growth stalled.
When the reserve bank eventually began cutting the Official Cash Rate (OCR) in August, the property market was flooded with homes for sale and values continued to retreat.
“We suspect that 2025 could prove to be a year of conflicting forces for New Zealand’s housing market with the net result being a relatively subdued upturn in sales volumes and property values,” said Wellington CoreLogic chief property economist Kelvin Davidson.
“Our expectation is that values could increase by around 5% across New Zealand as a whole.”
Such a lift would be small compared to the previous cycle, when cheap borrowing costs saw house prices rise 16% in 2020 and 26% in 2021.
Economists expect the reserve bank will eventually cut the OCR to around 3% this year, a far cry from the record-low 0.25% seen in 2020 when the economy was in the middle of the Covid-19 pandemic. — Bloomberg
