The property market is showing signs of stabilisation, with early indicators pointing towards a potential rebound in 2025.
CoreLogic data shows property values edged slightly lower in January, but the decline was minimal compared to sharper drops in previous months. With mortgage rates already falling and further cuts expected from the Reserve Bank of New Zealand (RBNZ), market conditions are becoming increasingly favourable for both buyers and sellers.
LJ Hooker Head of Network NZ Campbell Dunoon says the latest figures suggest a shift in market sentiment.
“With mortgage rates easing and property sales volumes rising, we’re starting to see renewed confidence from both buyers and sellers,” Dunoon said.
“While some areas are still seeing price adjustments, overall, the data points to a market that is stabilising and setting the stage for future growth.”
Stability Leading to Renewed Growth
The latest CoreLogic Home Value Index (HVI) shows that property values in New Zealand declined by just -0.1 percent in January, marking the fifth consecutive month of limited movement. Since August, the total decline has been a modest -0.4 percent, compared to the more significant -4.1 percent drop recorded in the first half of 2024.
CoreLogic NZ’s Chief Property Economist Kelvin Davidson notes that the downturn appears to have run its course.
“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.”
As mortgage rates have dropped significant from their peak, and with property sales volumes rising in recent months, there is a chance we will start to see a reduction in available listing on the market soon, Dunoon said
“The recent stability suggests we could be at the bottom of the cycle, which presents an opportunity for buyers to secure property before prices start to rise again.”
Stronger Market Activity & Increasing Buyer Confidence
One of the most telling signs of improving market conditions is the growing level of mortgage activity. The RBNZ’s latest ‘lending by purpose’ data reveals that mortgage commitments totalled $2.062 billion in January. Roughly a quarter of that was a result of borrowers changing loan providers, which is the highest level of loan provider switching since records began in 2017.
“This level of mortgage refinancing signals that homeowners are actively seeking out better deals, likely in response to falling interest rates,” Dunoon said.
“When people feel confident enough to refinance or take on new loans, it’s often a sign of improving sentiment in the market.”
Regional Highlights
While the national market remains broadly stable, some regions are already showing signs of growth:
- Hamilton led the way with a +0.5 percent increase in values for January.
- Tauranga and Dunedin both recorded modest gains of +0.1 percent.
- Auckland and Christchurch saw minimal movement at -0.1 percent.
- Wellington remains subdued, with a -0.6 percent decline, largely due to high listing volumes and public sector employment concerns.
“Hamilton’s strong performance is a good early indicator. We often see regional markets like Hamilton and Tauranga move ahead of larger centres, so this could signal broader growth in the months ahead,” he said.
RBNZ Decision Looming
Looking ahead, all eyes are on the RBNZ’s upcoming Official Cash Rate (OCR) decision on February 19. With inflation easing and economic conditions improving, many experts anticipate a rate cut or a signal of future reductions, which would further support borrowing activity.
“Another OCR cut would help affordability. If lending conditions continue to improve, we’ll likely see more first home buyers and investors re-entering the market.”
A Positive Outlook for 2025
While some caution remains due to economic uncertainty and upcoming debt-to-income ratio regulations, 2025 is shaping up to be a stronger year for the property market. The combination of stabilising values, declining mortgage rates, and improving buyer sentiment suggests that market conditions are becoming more favourable.
“For those thinking about buying, now is a great time to assess your options,” Dunoon said.
“We expect competition to increase as more buyers return, so taking action sooner rather than later could pay off.”
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