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December 10, 2024
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The New Zealand housing market is experiencing a period of stabilization after a significant drop in house prices, with the median house price currently at $763,000. New Zealand’s housing market has seen subdued activity in recent months, reflecting recent trends of slower sales and cautious buyer sentiment. Median house prices have continued to rise over the long term, contributing to ongoing concerns about housing affordability and highlighting the gap between property values and median household income.
Prices hit their lowest point in May 2023 and have now started to recover, marking the beginning of a rebound in the housing market. New Zealand house prices have shown signs of recovery, with recent gains following a period of decline, while long-term trends still point to significant growth over the past decade.
The market is expected to heat up in 2026 with house prices rising 5.0% due to OCR cuts and economic recovery. However, future house price growth is forecast to occur at a slower rate compared to previous cycles, reflecting more subdued market conditions.
New Zealand’s property market is supported by the Reserve Bank’s policy rate cut to 2.5%, which is expected to boost housing demand.
The current market trends are influenced by factors such as interest rates, housing supply, and economic growth.
Interest rates are a key factor influencing the New Zealand property market, with lower interest rates supporting stronger housing demand. Changes in the housing market can have significant impacts on New Zealand’s economy affecting household wealth and economic stability.
Housing supply is another crucial factor, with new housing supply surging in January and keeping stock levels high, which is restraining near-term house price growth. Property prices fluctuate across the country due to supply and demand differences, leading to regional variations in affordability and investment opportunities.
The labour market is also playing a significant role, with a soft labour market weighing on household confidence and limiting price momentum in the near term. Many investors are closely watching these trends to inform their investment decisions, especially as they consider potential capital gains and the tax implications of property investment, such as the bright-line test.
The Reserve Bank’s policies, including the official cash rate, are also impacting the market, with the bank aiming to manage inflation and economic growth. Recently, the Reserve Bank of New Zealand raised interest rates to combat high inflation, further influencing market dynamics. Zealand’s property market is subject to risks and potential policy changes, which could affect future market performance.
There is little evidence that some recent housing policies have significantly improved affordability, despite the significant impacts the housing market has on society and the economy.
House prices are expected to rise 4.5% over 2025, with the market expected to heat up in 2026 due to OCR cuts and economic recovery. NZ house prices are forecasted to increase at a slower rate compared to previous years, reflecting a more cautious outlook. In the first half of the year, house price trends have shown moderate growth compared to the same period last year. Market conditions may also change in the next few months as interest rates and buyer sentiment shift.
The New Zealand housing market is predicted to experience modest house price growth of 3% to 5% annually in the coming years, improving market confidence. In the medium term, house prices are expected to rise steadily over the next few years, supporting long-term investment. Major banks forecast an average increase of 6.80% in house prices between December 2024 and December 2025. Rising prices in some regions contrast with more stable prices elsewhere, highlighting the importance of location-specific trends.
The market is expected to be supported by factors such as low interest rates, increasing housing demand, and a stable economy. However, there are also risks and challenges associated with the market, including the potential for house prices fall, which could bring the national average down and impact borrowers’ equity. The current environment is considered a tough market for some investors, but may give buyers the upper hand in a buyer’s market.
The regulatory environment in New Zealand is playing a crucial role in shaping the property market, with the Reserve Bank’s policies aiming to manage inflation and economic growth.
The bright-line test is also impacting the market, with the test taxing gains on properties sold within a set period, excluding main homes. This measure was introduced to reduce speculative investment in property.
Loan-to-value restrictions are also in place, which are helping to reduce the risk of lending and stabilize the market.
The government’s housing policy is also influencing the market, with initiatives aimed at improving housing affordability and increasing the supply of housing.
The New Zealand economy is experiencing a period of growth, with the economy expected to recover in the second half of 2025. However, global economies can influence the New Zealand property market, as international economic instability may have significant impacts on local financial decisions and housing trends.
The labour market is also expected to stabilize, with unemployment rates expected to remain low, which will support housing demand. Still, a curve ball such as an unexpected economic event could disrupt the current outlook and affect employment resilience.
Household consumption is also expected to increase, which will drive economic growth and support the housing market. Changes in mortgage payments can have significant impacts on both borrowers and the overall housing market, influencing financial stability and lending practices.
However, there are also risks associated with the economy, including the potential for a global recession, which could impact the New Zealand housing market. House prices, which hit their lowest point in May 2023, have now started to recover, reflecting improving economic conditions.
The Auckland properties market is experiencing a slowdown, with house prices falling 22% from their peak. In many cases, properties in Auckland are selling below their Council Valuation (CV), reflecting the current market conditions.
The Wellington city market is also experiencing a decline, with house prices falling 24% from their peak. Many homeowners in Wellington are choosing to sell their properties now to take advantage of current market opportunities or to avoid further declines.
However, other regions, such as Hamilton city, are experiencing an increase in house prices, with the median house price rising 1.27%. The supply of houses in Hamilton is impacting affordability, as limited availability continues to drive prices up.
The regional market trends are influenced by factors such as population growth, housing supply, and economic growth. Auckland house prices, however, have shown a long-term annual growth rate of 6.6% on average from 1992 to May 2025. Property prices vary significantly across regions, with some areas experiencing sharper increases or declines than others.
Some buyers are seeking more space for the same price by moving to different regions, taking advantage of regional differences in property prices and housing options.
The New Zealand housing market faces a range of risks and challenges that could influence house prices and overall market stability in the near future. One of the most significant concerns is the potential for rising interest rates, which can lead to higher mortgage repayments and reduce affordability for many buyers. This is particularly challenging for first home buyers, who may find it harder to enter the market as borrowing costs increase.
Government policies, such as the bright line test, also play a crucial role in shaping the market. Changes to these policies can affect the behaviour of both home buyers and investors, sometimes leading to shifts in demand or sudden changes in house price growth. The Reserve Bank’s loan-to-value restrictions are another factor, as they can limit the ability of buyers to secure financing, especially for those with smaller deposits.
External influences, including global economic trends and fluctuations in population growth, add another layer of uncertainty to the New Zealand housing market. While recent years have seen strong house price growth, there are ongoing concerns about housing affordability and the risk of a market correction if prices become unsustainable. Buyers and investors should remain vigilant and consider these risks when making decisions in the current market environment.
Buying a house in New Zealand involves navigating a dynamic housing market, where house prices and market conditions can vary widely by region. The median house price currently sits at around $763,000, but this figure can be much higher in areas like Auckland properties, while other regions such as Hamilton City may offer more affordable options. For first home buyers, understanding the latest data and trends is essential to making informed decisions.
Key factors to consider include current interest rates, which directly impact mortgage lending and monthly repayments, as well as the overall housing supply in your preferred area. Population growth and the state of the economy also influence demand and property values, so it’s important to keep an eye on these indicators. Home buyers should research the market thoroughly, comparing prices and properties across different regions to find the best fit for their needs and budget.
It’s also wise to be aware of the potential for falling house prices, which can affect both short-term value and long-term investment potential. Staying informed about government policies and market changes will help buyers navigate the process with greater confidence and less risk.
Investing in the New Zealand housing market offers significant opportunities, but success depends on having a clear strategy and understanding the unique dynamics of the market. Focusing on regions with strong demand and limited housing supply, such as Auckland and Wellington, can help investors benefit from potential house price growth and steady rental income. Monitoring interest rates is also crucial, as changes can impact both mortgage costs and overall returns.
Diversification is key for reducing risk—consider balancing investments between residential construction, established properties, and even commercial real estate. Keeping up with the latest market data, such as monthly reports from the Real Estate Institute, allows investors to make informed decisions based on current trends in house prices and sales volumes.
It’s important to remain aware of the risks, including the possibility of house prices falling or changes in government policy that could affect the market. By staying proactive and adaptable, investors can position themselves to take advantage of opportunities in the New Zealand housing market while managing potential challenges.
The rental market in New Zealand is experiencing a slowdown in rent growth, with the rental market expected to experience a decline in rent inflation.
However, the rental market is still presenting opportunities for investors, with the median rent currently at $500 per week.
The rental yield is also relatively high, with the average rental yield currently at 4%.
However, investors should be aware of the risks and challenges associated with the rental market, including the potential for a decline in rental demand and an increase in vacancy rates. Buying a house in New Zealand now may involve less competition due to fewer buyers in the market.
