Investors on the rebound and first home buyers still strong in sluggis…

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New Zealand's property market continues to present mixed signals, with sales volumes rising yet the overall level of activity remaining subdued, with prices also declining further and listings at elevated levels.

The CoreLogic NZ November Housing Chart Pack shows property sales activity increased by 16% in October compared to the same time last year, the 17th increase in the past 18 months. However, sales volumes remain 10–15% below typical seasonal levels, reflecting cautious buyer behaviour amidst ongoing affordability challenges.

CoreLogic NZ Chief Property Economist Kelvin Davidson said despite a significant rise in sales activity to 78,360 over the past 12 months, volumes were still well below the long-term annual average of 90,000 sales.

"The abundance of listings on the market is providing buyers with significant choice, allowing them to take their time and negotiate favourable deals," Mr Davidson said.

"This buyer caution is reflected in the CoreLogic Home Value Index, which has recorded eight consecutive months of decline, with national property values now 18% below their post-COVID peak."

The ongoing caution among buyers is also evident in the varied performance of key regions. Wellington, Auckland, and Hamilton experienced further declines in values in October, while Christchurch showed slight growth, reinforcing the uneven nature of the market at present.

First Home Buyers take the leap

First home buyers (FHBs) set a new record last month, making up nearly 28% of purchases in October. This milestone reflects their ability to leverage lower property prices, reduced competition from other buyer groups, and options like KiwiSaver withdrawals and low-deposit financing options at the banks.

Investors are also showing signs of returning, with mortgaged multiple property owners (MPOs) accounting for 23% of purchases, up from earlier in the year. Falling mortgage rates and easing loan-to-value ratio (LVR) restrictions appear to be creating more favourable conditions for this group – alongside smaller tax bills as mortgage interest deductions move back towards 100%.

Mr Davidson noted that the rise in market share for both FHBs and mortgaged investors is an important development.

"Sometimes there's a perception that it can only be one or the other. But we need both FHBs and investors to have a solid presence in the market, so the latest figures are encouraging."

Relocating owner-occupiers ('movers') remain quieter than usual, although Mr Davidson said pent-up demand among this usually active demographic could drive increased activity in the coming months.

"Movers are an important indicator of market confidence," he said.

"With elevated listings, there's potential for this segment to gain momentum as interest rates come down and market conditions stabilise. Long housing chains seem to have been an issue lately, so increased confidence levels should help all deals in those chains to settle, meaning everybody can move on."

Economic context and outlook

Despite recent cuts to the official cash rate (OCR), New Zealand's economy remains under pressure, with subdued activity across key sectors and a weakening labour market.

Annual inflation has returned to the Reserve Bank's target range of 1–3%, which is contributing to expectations of further OCR reductions in 2025.

However, Mr Davidson cautioned against expecting a strong, near-term housing market rebound despite falling mortgage rates. After all, credit remains constrained for some buyers, with high loan-to-value ratio (LVR) lending still facing restrictions and debt-to-income (DTI) limits on the horizon.

Reserve Bank figures show that two in three mortgages are due to reprice over the next 12 months, which will offer financial relief to borrowers as rates begin to ease.

"Affordability remains a key constraint, and while lower mortgage rates may support price stabilisation, a fresh boom seems unlikely," he said.

"Elevated inventory, stretched budgets, and tighter credit conditions continue to weigh on the outlook, as do the emerging job losses."

November Chart Pack highlights:

New Zealand's residential real estate market is worth a combined $1.61 trillion.
Property sales volumes rose 16% year-on-year in October, though activity remains below seasonal norms.
The CoreLogic Home Value Index fell 0.5% in October, the eight consecutive monthly fall, with values down 18% from the national peak.
Total listings on the market have reached 28,954, a 25% increase on the five-year average.
First home buyers reached a record 28% of purchases in October, while mortgaged multiple property owners accounted for 23%.
National rental yields have improved to 3.9%, the highest level since late 2015.
Inflation returned to the 1–3% target band in Q3, with further OCR cuts likely.