Property prices tipped to rebound soon
New Zealand's median property price fell another 0.1% in January, which was the 10th decline in 11 months, according to CoreLogic.
However, it was also the fifth month in a row with limited price movement – after the median price dropped 4.1% between March and August 2024, it has since fallen only 0.4% more, suggesting the market might be near the bottom.
The national median price, of $803,819, is now 17.5% below the record set in early 2022 but 16.3% higher than March 2020, when the pandemic started.
Why buyer competition may soon rise
CoreLogic Chief Property Economist Kelvin Davidson said there were signs the national property market was poised for a rebound.
"Since the mini-downturn seen through the middle part of last year petered out in August, national property values have been in a holding pattern – not moving clearly in either direction,” he said.
“But with mortgage rates having dropped significantly from their peaks, property sales volumes have continued to rise in recent months and may well start to reduce the available stock of listings on the market in the near term. That would create more competitive pressure amongst buyers, and it wouldn’t be a surprise to see property values start to rise again shortly.”
Why 2025 is likely to be stronger than 2024
Mr Davidson said investor activity was likely to increase in 2025, despite a slowdown in net migration and therefore a reduction in rental demand.
“Even so, the tax rules have become more favourable for mortgaged investors again, and of course lower interest rates are shrinking the top-ups from other income that are typically required to sustain rental property cashflows. Some extra demand from investors this year is firmly on the cards, although the debt-to-income ratio rules will be something this group may have to weigh up too,” he said.
“Other buyer groups will also tend to target property in a lower-mortgage-rate environment, and certainly conditions remain favourable for first home buyers too. A more liquid and faster-moving market may also help existing owner-occupiers to get their house sold and allow them to press ahead with the next purchase.”
As a result, Mr Davidson said that while 2025 was likely to be a stronger year for property than 2024, any rebound might turn out to be smaller than past recoveries.
Are you thinking about buying a home or investment property this year? In that case, given Mr Davidson’s forecast, it might be best to move sooner rather than later, to get ahead of future price rises. Contact me to discuss your mortgage options.