New Zealand house prices tipped to rise after ‘stagnant’ year
Investor bets that the OCR may rise late this year
[WELLINGTON] New Zealand house prices may rise over the next 12 months after falling for two straight years and ending 2025 at the lowest since mid-2023, according to property consultancy Cotality.
“It’s been a stagnant couple of years over 2024 and 2025,” Kelvin Davidson, chief property economist, said on Tuesday (Jan 6) in Wellington. “In 2026, property values look likely to start rising again, perhaps by 5 per cent.”
Prices fell 1 per cent in 2025 after dropping 2.7 per cent the previous year, today’s report showed. In December, Cotality’s home value index fell 0.2 per cent from November, the second straight monthly decline.
Optimism about the house price outlook is being fanned by a drop in interest rates and signs that an economic recovery is under way. Aggressive central bank interest-rate cuts and a revival of business confidence sparked a 1.1 per cent lift in gross domestic product in the third quarter, which is tipped to boost buyer confidence in the coming months.
Mortgage interest rates in November were the lowest in more than three years as the Reserve Bank of New Zealand cut the Official Cash Rate (OCR) to 2.25 per cent, down 325 basis points since July 2024.
Still, investor bets that the OCR may rise late this year has lifted wholesale borrowing costs and led banks to raise home-loan rates for terms of two years and longer.
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Davidson said signs that home-loan rates may creep higher, together with a jobless rate at a five-year high and the impending volatility of an election year, are reasons for buyers to be cautious.
Households will “have some delicate decisions to make with their mortgages, especially in light of some recent increases to longer-term fixed rates”, he said. “All in all, 2026 may well be a stronger year for the housing market than 2025, despite the headwinds.” BLOOMBERG
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