New Zealand house prices rise for first time in six months
A large overhang of houses for sale and buyer caution are expected to continue to weigh on prices
[WELLINGTON] New Zealand house prices rose for the first time in six months in September as borrowing costs fell, but values remain lower than a year ago.
Prices rose 0.1 per cent from August, when they dropped a revised 0.4 per cent, property consultancy Cotality said on Thursday (Oct 2) in Wellington, citing its home value index. From a year earlier, the gauge fell 0.2 per cent.
The slight gain from a two-year low in August is an early sign that lower home-loan interest rates are starting to generate demand in the property market, which had been retreating as economic growth stalled. Still, a large overhang of houses for sale and buyer caution are expected to continue to weigh on prices.
“September’s rise in values was clearly marginal, and it’s far too early to conclude this marks the start of a new, sustained lift,” said Kelvin Davidson, chief property economist at Cotality in Wellington. “Caution continues to pervade the market.”
Mortgage interest rates are the lowest in three years after the Reserve Bank of New Zealand’s aggressive monetary easing saw the official cash rate drop to 3 per cent in August from 5.5 per cent in July last year. Policymakers have signalled the rate could drop to 2.5 per cent by the end of this year, with some economists tipping it may fall even lower.
The economy contracted a larger-than-expected 0.9 per cent in the three months to June, and the jobless rate is at a five-year high. Still, there are signs of a pick-up in consumer spending that is expected to underpin a second-half expansion.
Thursday’s (Oct 2) report showed house prices slid 1.6 per cent in the five months to August. They may languish for the remainder of 2025. The central bank has projected a 0.3 per cent contraction for the year, while most economists forecast very little growth.
Davidson said that mortgage interest rates may have further to fall, which will be good news for borrowers who need to reprice when fixed-term arrangements roll over.
“There does seem to be growing scope for values to start rising more consistently in 2026” but “a fresh boom seems unlikely, especially with the economy and labour market only set to recover slowly”, he said.
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