New Zealand house prices edge higher, while buyers stay cautious
Investors are betting the next rate move will be up, most likely before the end of this year
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[WELLINGTON] New Zealand house prices edged higher in February, though the property market remained broadly subdued with values still down on a year earlier and more than 17 per cent below their 2022 peak.
The Home Value Index advanced 0.2 per cent from January, when it slid 0.1 per cent, property consultancy Cotality said on Thursday (Mar 5) in Wellington. The national median value in February was NZ$806,697 (S$610,951), 1.2 per cent lower than 12 months ago.
Lower interest rates and signs of an economic recovery are supporting some optimism about the outlook for prices, though buyers are still largely on the sidelines. Cotality reckons a pickup in the labour market, where unemployment remains above 5 per cent, will be key to underpinning a house-price revival.
A modest lift in a single month “is nothing to get carried away about”, said Kelvin Davidson, chief property economist at Cotality in Wellington. “Given the cautious attitude that still prevails among both buyers and sellers, we’d need to see at least two to three more monthly increases before calling it a trend.”
The Reserve Bank of New Zealand in November reduced the Official Cash Rate (OCR) to 2.25 per cent, concluding an aggressive campaign of 3.25 percentage points of easing since August 2024. Investors are betting the next rate move will be up, most likely before the end of this year.
Still, the central bank’s dovish hold in February and recent reductions in longer-term mortgage rates by some banks may spur borrowers, Davidson said.
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“Anyone with large debts will no doubt be pleased to see the Reserve Bank of New Zealand pushing back slightly on the suggestion that the OCR could rise sooner rather than later,” he said.
“Although the so-called animal spirits in the housing market have the potential to re-emerge at any stage and with little warning, a balanced view at present is for only modest growth in values this year.” BLOOMBERG
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