As we stand at the threshold of 2025, the New Zealand property market finds itself at a critical juncture. After weathering a significant storm that saw values plummet by 15-20% from their peak just three years ago, many are wondering: Will the housing market finally find its floor?
The property market has been buffeted by a few things, all contributing to a reduction in price. Thrown in CPI inflation of another 15% or so in the last few years and the picture’s been pretty bleak.
When will it end?
It’s a bit more complex than we’d like to admit, and so it’s honestly hard to say.
- Inflation pressures
- Immigration fluctuations
- Interest rate volatility
- Changing employment data
- Supply and demand imbalances
And don’t forget the human element – the pendulum swinging between fear and greed. This is a recipe for market uncertainty.
Does that mean a Buyer’s Market?
Current conditions seem to favor buyers yes:
- Vendor competition is high, with more sellers than qualified buyers.
- Interest rates are expected to keep dropping, potentially below the critical 4.5% threshold.
- Property values have decreased significantly already, with a million-dollar home from 2022 now representing just $700,000 in today’s purchasing power.
You’re our Only Hope, OCR
Despite the downturn, there are signs of potential recovery:
- Inflation is predicted to slow
- The possible return of ex-pats could fuel market demand
- And most importantly, expert consensus points to falling interest rates. When it’s not that much more to own than buy, that’s when things really heat up.
Political Wildcards
The political dimension adds another layer of complexity, though, and this is something to watch. You may not like the current government for your own reasons, but even within the hardcore supporters, murmurs of discontent with the current government raises questions about potential policy shifts and their impact on the property market. What would happen to property prices if Labour got back in?!
Looking Ahead
Whether 2025 marks the beginning of a recovery or the continuation of a correction remains to be seen. However, one thing is clear: the decisions made in the coming months could have far-reaching consequences for both buyers and sellers..
Recently on the Everyday Investor Podcast I spoken with Sarah Wood, CEO of realestate.co.nz. We talked about immigration trends, supply dynamics, and market momentum through clearance rates.
Good times, or bad times / Fear, or greed / Caution, or opportunity. 2025 promises to be a pivotal year for New Zealand’s property market. Whether you’re a potential buyer, seller, or simply an interested observer, understanding these market dynamics will be crucial in the months ahead.
