A deep and prolonged downturn is still helping buyers

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The downturn in New Zealand's property values has generally been deep and prolonged since 2021, giving buyers increased pricing power.

CoreLogic NZ's January Housing Chart Pack shows property values nationally have fallen by nearly 18% from their post-COVID peak.

Roughly three years on from the post-COVID peak, the largest declines in values among the main centres have been seen in Wellington and Auckland, down by around 25% and 22% respectively. At the other end of the spectrum, Christchurch is down by 'only' 7%.

CoreLogic NZ Chief Property Economist Kelvin Davidson said it hasn't been a surprise to see property values generally remain subdued, given plenty of challenging factors.

"In December, the national figure edged down by another 0.2%. That was the ninth fall in the past 10 months, with those drops initially reflecting high mortgage rates, but more recently the weakness of the labour market."

Mr Davidson said while sales volumes have risen gently for around 18 months, they remain below normal and haven't significantly impacted the stock of available listings on the market.

"Total listings on the market remain elevated, up around 25% compared to the five-year average, so buyers certainly have the pricing power.

"Main centres like Auckland, and Wellington in particular, have seen a strong rise in listings in December compared to the same time last year, which has softened price pressures in those regions for several months now."

"It's not great news for homeowners especially those that purchased around peak levels, but ultimately the downturn conditions are most favourable for recent buyers," he added.

As for lending market activity, it continues to trend higher with borrowers moving away from longer-term loans.

"While affordability is still stretched, the majority of borrowers are now opting for floating rates or 6-12 month fixed terms," he said.

Looking at the year ahead, Mr Davidson noted there are some supports for the market, but also challenges that buyers can anticipate.

"Lower mortgage rates will obviously be a boost for sales volumes and property values. But there are also debt to income ratio caps lurking on the horizon. DTIs aren't binding yet, but they could become a much bigger consideration for some borrowers in the first half of the year."

Highlights from the January 2025 Housing Chart Pack include:

New Zealand's residential real estate market is worth a combined $1.62 trillion.
The CoreLogic Home Value Index shows property values across New Zealand edged down by another 0.2% in December. Over the three months to December, values nationally fell 0.3%, and over 2024 they dipped 3.9%, with the level now back down at a 17-month low.
Total listings on the market were 25,139 in December to be 25% up on the five-year average. Total listing counts on the West Coast and Northland are lower than last year, but a larger region such as Wellington has risen significantly, up nearly 30%.
Rental market conditions remained flat amid slowing net migration. The pace of growth has now dropped to lows not seen since 2022.
Gross rental yields now stand at 3.9%, which is the highest level since early 2016.
Around 66% of NZ's existing mortgages by value are currently fixed but due to reprice onto a new mortgage rate over the next 12 months.
Inflation is back in the 1–3% target band, with the next OCR cut forecast for February.

Download and subscribe to the monthly CoreLogic Housing Chart Pack at corelogic.co.nz/news-research/reports/housing-chart-pack.

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