The New Zealand real estate market is set to rebound in 2025, with Raine & Horne, research house CoreLogic and leading banks forecasting 5-7% growth in national property values. 

After a year of stabilisation following a series of rate cuts, the market is showing renewed strength driven by lower mortgage rates, shrinking days on market, and heightened buyer activity from empty nesters and returning ex-pats. 

Raine & Horne, which has 65 offices across Aotearoa, also highlighted the possible impact of FOMO (fear of missing out), which is expected to energise the market further in the year ahead.

“The Reserve Bank’s series of rate cuts—starting with a 25-basis point reduction in August, followed by a 50-point cut in October and another 25 points in November—are now filtering through to the market, prompting buyers and vendors to take action,” said Angus Raine, Executive Chairman of Raine & Horne.

“We’re witnessing increased sales, shorter days on market, and higher attendance at open homes. While these are still early signs, market activity has noticeably picked up momentum since the initial rate cut in August, which bodes well for growth in 2025. 

“In Tauranga we are seeing empty nesters trading down, Queenstown attracting returning expats with lifestyle appeal, and Christchurch experiencing a resurgence fueled by growing demand based on the garden city’s affordability, amenities and early signs of FOMO at some auctions,” Angus added.

In the CoreLogic New Zealand Best of the Best 2024 report Chief Property Economist Kelvin Davidson said that with inflation now under control and mortgage rates falling, he was cautiously optimistic about 2025, suggesting the country was set for a period of modest recovery.

He estimated conditions could lead to a 10% rise in sales volumes and potential uptick in property values of around 5% over the year, however Kelvin Davidson warned values would remain well below the post-COVID peak, partly due to the dampening pressure caused by a build-up of listings.

"Affordability has improved compared to recent years, but the lingering effects of high listings and economic uncertainty might mean an uneven recovery for the property market,” he said.

BNZ chief economist Mike Jones is forecasting a 7% increase in house prices for 2025. Declining mortgage rates were boosting borrowing capacity and improving cash flow for buyers and drawing investors back into the market.

The restoration of interest deductibility for investors on 1 April 2025 that will allow investors to once again claim 100% of the interest incurred on an investment property loan[i] is also expected to fuel higher investor participation. These factors could lead to greater demand through early 2025, Mike Jones said. He expected inventory to normalise over the next six to 12 months, paving the way for house prices to increase gradually.

Kiwibank chief economist Jarrod Kerr said falling interest rates would be “the game changer”.  

“We’re still forecasting 5% to 7% growth in house prices next year. After a 20% fall, that’s a recovery of some description.”

Whether you want to rent, let, sell or buy a property, don’t hesitate to contact your local Raine & Horne office.

 
[i] https://www.ird.govt.nz/property/renting-out-residential-property/residential-rental-income-and-paying-tax-on-it/property-interest-rules/changes-to-the-interest-limitation-rules#:~:text=From%201%20April%202024%2C%20you,100%25%20of%20the%20interest%20incurred.