PHOTO: FILE
New Zealand Property Market: Investors Rebound, First Home Buyers Stay Strong Amidst Challenges
The New Zealand property market remains a hot topic, with shifting dynamics that reflect broader economic challenges and opportunities. Despite rising sales volumes, the market continues to exhibit subdued activity, declining prices, and elevated listings. For prospective buyers, sellers, and investors, the trends offer a mix of caution and opportunity.
Sales Activity Rises, Yet Below Seasonal Norms
According to the latest CoreLogic NZ November Housing Chart Pack, property sales activity saw a 16% increase in October compared to the same month last year. This marked the 17th rise in the past 18 months. However, sales volumes remain 10–15% below typical seasonal levels, reflecting ongoing buyer hesitation amidst affordability constraints.
CoreLogic NZ Chief Property Economist Kelvin Davidson highlighted that while sales activity reached 78,360 over the past year, this is still below the long-term annual average of 90,000.
“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 evident in the CoreLogic Home Value Index, which recorded its eighth consecutive month of decline in October, with national property values now sitting 18% below their post-COVID peak.
Regional Performance Remains Uneven
The uneven nature of New Zealand’s housing market is evident in regional variations:
- Wellington, Auckland, and Hamilton continued to see declines in property values.
- Christchurch, however, showed slight growth, standing out as a beacon of resilience amidst an otherwise challenging market.
First Home Buyers Shine Amid Market Uncertainty
First Home Buyers (FHBs) have become a dominant force, making up a record-breaking 28% of all purchases in October. Lower property prices, reduced competition, and support mechanisms such as KiwiSaver withdrawals and low-deposit financing have empowered this demographic to step into the market.
Investors Are Returning
While FHBs lead the charge, investors are also showing signs of recovery:
- Mortgaged multiple property owners (MPOs) accounted for 23% of purchases in October, up from earlier in the year.
- Factors such as falling mortgage rates, eased loan-to-value ratio (LVR) restrictions, and restored mortgage interest deductions have contributed to this resurgence.
Mr. Davidson stressed the importance of a balanced market presence between FHBs and investors:
“We need both FHBs and investors to have a solid presence in the market, so the latest figures are encouraging.”
Movers and Market Confidence
Relocating owner-occupiers, or “movers,” remain quieter than usual, with many holding off amid uncertain market conditions. However, this segment is expected to regain momentum as interest rates continue to decline and market conditions stabilise.
“Movers are an important indicator of market confidence,” Mr. Davidson noted, adding that increased activity in this segment could break housing chains and facilitate smoother transactions across the board.
Economic Context: Challenges and Opportunities
The broader economic environment plays a pivotal role in shaping the housing market. Despite cuts to the official cash rate (OCR), New Zealand’s economy faces pressures from subdued activity across key sectors and a weakening labour market. However, inflation returning to the Reserve Bank’s target range of 1–3% has bolstered hopes for further OCR reductions in 2025.
That said, affordability challenges persist. Credit remains constrained due to LVR restrictions and upcoming debt-to-income (DTI) limits. Yet, relief may be on the horizon for many borrowers, as two-thirds of mortgages are set to reprice over the next 12 months amidst easing rates.
“Affordability remains a key constraint,” Mr. Davidson said. “While lower mortgage rates may support price stabilisation, a fresh boom seems unlikely given elevated inventory and tighter credit conditions.”
Key Market Statistics from the November Chart Pack
- Market Value: New Zealand’s residential real estate is worth a combined $1.61 trillion.
- Sales Growth: Property sales volumes rose 16% year-on-year in October but remain below seasonal norms.
- Home Value Decline: The CoreLogic Home Value Index dropped 0.5% in October, marking the eighth consecutive monthly fall.
- Listings: Total market listings have reached 28,954, a 25% increase on the five-year average.
- Buyer Trends: FHBs made up a record 28% of purchases, while mortgaged investors accounted for 23%.
- Rental Yields: National rental yields improved to 3.9%, the highest level since 2015.
Looking Ahead
While the market may not see a dramatic rebound in the near term, the current conditions offer opportunities for strategic buyers and investors. For FHBs, the combination of lower prices and financing options makes it an attractive time to enter the market. Meanwhile, investors can benefit from improving yields and favourable tax changes.
For a detailed monthly analysis of New Zealand’s housing market, including data-driven insights, download the CoreLogic Housing Chart Pack at corelogic.co.nz/news-research/reports/housing-chart-pack.
By understanding the shifting dynamics of New Zealand’s housing market, both buyers and investors can position themselves strategically for the future. As affordability challenges and economic pressures evolve, opportunities remain for those ready to act.