Signs of stabilisation and renewed confidence are emerging in the property market after a year of uncertainty. February saw steady buyer activity, easing mortgage rates, and a shift in momentum that suggests we may be moving past the downturn of 2024.
According to CoreLogic’s latest data, national property values increased by 0.3 percent in February—the strongest monthly gain since January 2024. The modest increase signals that last year’s ‘mini downturn,’ which saw a 4.1 percent drop in values between March and September, may be coming to an end.
LJ Hooker Group Head of Network NZ Campbell Dunoon says that after months of interest rate cuts and renewed optimism, it’s reassuring to see a growing property market.
“With some mortgage rates now below five percent, property buyers now have reason to jump off the fence. Conditions are now ideal for those who need to borrow to achieve their property goals,” Dunoon said.
Regional market performance
Growth was not uniform across the country, with some areas rebounding more strongly than others:
- Christchurch and Dunedin recorded 0.6 percent increases in property values.
- Hamilton saw a 0.5 percent rise.
- Auckland edged up 0.3 percent, indicating stabilisation in New Zealand’s largest market.
- Wellington recorded a modest 0.1 percent increase, a significant improvement from the 0.7 percent average declines over the previous 11 months.
Despite these improvements, national property values remain 16.9 percent below their late 2021 peak but are still 17.1 percent higher than pre-pandemic levels in March 2020.
Increased listings, more choice for buyers
Realestate.co.nz data shows that the number of properties for sale in February reached its highest level for the month in a decade. National stock levels have climbed above 35,000, the highest since 2015, reflecting increased supply as sellers adjust their expectations.
“Market conditions have improved, with buyers now having more choices than they have in recent years,” Dunoon said.
“While properties are still selling, sellers need to be realistic with pricing to remain competitive in a market where choice has expanded.”
Despite rising stock levels, new listings for February were lower than anticipated, and the national average asking price saw a slight dip. This suggests that while more properties are available, sellers are becoming more flexible to attract buyers.
Lower interest rates driving buyer activity
Easing mortgage rates continue to support market momentum, with first home buyers taking advantage of stabilising property prices and improved affordability.
“Lower interest rates and a stabilising market have given buyers, particularly first home buyers, more confidence to act,” Dunoon said.
“We’re also seeing increased participation from investors and movers as they reassess opportunities in a more balanced market.”
Investor interest returning as tax changes take effect
Investor activity is showing signs of revival, particularly in regions where rental returns remain strong. While rental market trends vary by location, regional centres such as Tauranga and Christchurch continue to attract investor interest, while Auckland and Wellington have seen softer rental growth.
“Investors are taking a measured approach, focusing on areas with strong rental demand and long-term growth potential,” Dunoon said.
“As mortgage rates continue to ease and the return of 100 percent mortgage interest deductibility from 1 April approaches, we expect more investors to re-enter the market in 2025.”
What’s next?
While recent data suggests the worst of the downturn may be behind us, the market’s recovery is expected to be gradual. Elevated stock levels could moderate price growth in the short term, but increasing buyer activity signals a more balanced market ahead.
“The fundamentals of the market are shifting. With affordability improving, mortgage rates easing, and confidence returning, we anticipate steady, sustainable growth rather than the sharp fluctuations seen in previous cycles,” Dunoon said.
Migration trends could also further influence the market. New Zealand continues to experience strong net migration, which historically supports housing demand. If this trend continues, it could place upward pressure on both rental and property prices in high-demand areas.
Looking ahead, economists expect the Reserve Bank of New Zealand to take a cautious approach to interest rate adjustments, with more rate cuts likely, but at a measured pace. As a result, mortgage rates are expected to remain stable or gradually decrease, reinforcing positive buyer sentiment.
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