Housing prices are predicted to rise by more than 5% next year in a landmark real estate report issued by Westpac NZ.
Its chief economist Kelly Eckhold says in his latest report that prices should remain stable for the rest of this year and are unlikely to rise sharply in the spring selling season.
“Investor and owner-occupied demand have continued to grow, but population growth is currently slow,” says Mr Eckhold, explaining one factor that has dampened a rebound in NZ housing values.
“The market remains adequately supplied, in part due to (solid) levels of construction activity.”
Westpac NZ says values are expected to lift 5.4% next year, which would signal a noticeable turnaround from the current market conditions.
It cast doubt on its original 2025 prediction of a 3.6% lift in values, saying its forecast looks “optimistic given the recent momentum in prices”.
“Lower interest rates should eventually support increased demand, but it will take
time for momentum to shift,” it said.
The bank’s report describes the current market as being in a “comatose” state, and it attributed this to New Zealanders’ concern about the economy and a hangover from the boom conditions during Covid and its immediate aftermath.
Affordability and the fear of paying too much are hindering the real estate market.
According to Westpac NZ, an annual growth rate of 6% for a decade after the Global Financial Crisis set the stage for the current market condition.
It said only Canada witnessed such growth rates. Not coincidentally, Canada’s housing market is in a similar position to New Zealand’s, and seven rate reductions by the Bank of Canada have failed to reignite meaningful activity.
Referring to the aftermath of the Covid price spike, Westpac NZ says in its report: “Countries that were most overvalued (New Zealand and Canada especially) fell by the most so that much of the increase in real house prices that occurred over the 2019-21 period was eventually unwound.
“New Zealand’s trend since 2023 is not exceptional when compared with our global peers.”
So, what should you do if you are ready to sell and want to make the most of today’s market conditions with your next purchase? Here are five tips:
Time your listing – Aim to list later this year or early next year as gains begin to materialise. If you’re upsizing, don’t leave your sales campaign too late. Otherwise, you may pay even more for your next property.
Five-star presentation – Use the current low-pressure window to complete all necessary repairs, cleaning and staging. This ensures the property is in perfect condition when it goes on the market. There is always buyer interest in well-presented properties.
Stand out in the crowd – Invest in high-quality staging and presentation to stand out against the competition. This will also help justify your valuation.
Price strategically – Be prepared to price your property to attract the growing pool of investors, as well as owner-occupiers. If you can attract at least two interested parties, a good agent should be able to ignite a bidding war, thus maximising the size of the deal.
Capitalise on sentiment – Be ready to go to market the moment you see the first signs of economic confidence returning. Tailor your marketing materials to focus on your property’s long-term value, its premium features and the lifestyle of the location.