The Kiwi property market enters 2025 in an environment of falling interest rates, new lending rules, economic challenges and an increasing number of properties coming onto the market.
It’s a lot to take in.
After a tough couple of years for upsizers and aspiring first homebuyers, our real estate scene is finally loosening up thanks to lower interest rates.
Retail mortgage rates are now hovering in the 5%-6% range, and that’s thanks to the Bank of New Zealand dropping the base rate to 4.25% from 5.5%.
The 5.5% rate put many properties beyond the reach of buyers.
It lasted from April 2023 to July 2024 and came in response to a spike in the inflation rate caused by government stimuli designed to keep the economy running during the pandemic.
Today, concerns about the Kiwi economy and job security may act to stop values rising on the back of cheaper loans.
CoreLogic NZ Chief Property Economist Kelvin Davidson believes the new debt-to-income (DTI) ratio caps – designed to prevent lenders fuelling a future property boom – could be another handbrake on values.
He said: “Lower mortgage rates will support sales activity and help stabilise property values, but affordability constraints, elevated listings, and a soft labour market will remain key challenges.
“DTI restrictions may also start to influence buyer behaviour, adding further complexity.”
CoreLogic predicts transaction numbers could rise 15% compared with 2025.
Home values might edge 5% higher, which CoreLogic described as a “muted recovery”.
The latest CoreLogic report highlighted the following:
Total NZ Market Value: $1.62 trillion.
Values Under Pressure: The CoreLogic Home Value Index fell 0.4% in November, the ninth consecutive monthly decline, bringing the total fall since February’s mini peak to 5%. (This represents upside for all buyers, especially upsizers and first homebuyers.)
Listing Landslide: Total listings has surpassed 30,000 – up 25% on the five-year average.
Transaction Traction: Sales activity increased 9% year-on-year in November, but remains 10% below typical seasonal levels.
Enthusiasm of Youth: First home buyers represent 25.5% of purchases.
Flats are flat: Rental market conditions remained flat amid slowing net migration.