New Zealand house prices drop to two-year low in weak economy
The country’s property market has retreated under the weight of a large overhang of houses for sale and buyer caution over their ability to borrow as economic growth stalls
[WELLINGTON] New Zealand house prices fell for a fifth straight month to a two-year low in August as sluggish economic growth and rising unemployment keep buyers on the sidelines.
Prices fell 0.2 per cent from July, when they dropped a revised 0.4 per cent, property consultancy Cotality said on Thursday (Sep 4) in Wellington, citing its home value index. From a year earlier, the gauge fell 0.1 per cent, taking it to the lowest since August 2023.
New Zealand’s property market has retreated under the weight of a large overhang of houses for sale and buyer caution over their ability to borrow as economic growth stalls. Aggressive monetary policy easing by the central bank has dropped home-loan interest rates to the lowest in more than three years, but has so far failed to ignite demand.
“Given the continued economic weakness, further increases in unemployment and subdued confidence it is no surprise that property values are treading water,” said Kelvin Davidson, chief property economist at Cotality in Wellington. “Right now, caution is the dominant theme.”
The economy may have contracted in the second quarter as uncertainty about global trade and US tariffs prompted firms to reduce investment and hiring. The jobless rate has risen to a five-year high of 5.2 per cent.
The Reserve Bank of New Zealand (RBNZ) has cut the Official Cash Rate by 250 basis points since August last year, and has signalled there could be another 50 points of easing to come, which would drop its benchmark to 2.5 per cent. Most banks are now offering a two-year fixed-rate home loan for 4.75 per cent, which is the lowest since March 2022.
House prices have slipped since the start of the year and may languish for the remainder of 2025. ANZ Bank last week forecast nil growth for the year while the RBNZ has projected a 0.3 per cent contraction.
Davidson said the “conflicting forces” of stimulus from lower mortgage rates offset by a weak economy and high levels of listings are likely to persist through to December. He said that the transmission of lower borrowing costs into household spending and more sustained economic growth should support the market in 2026.
“Property values may be poised to rise a little more clearly in 2026,” he said. “But a fresh boom doesn’t look likely.” BLOOMBERG
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