New Zealand housing market shows signs of life as prices gain

NEW Zealand’s housing market showed slight signs of life in February as prices rose the most in more than a year, according to CoreLogic New Zealand.

Prices rose 0.3 per cent in February from January, when they were unchanged, the property agency said on Thursday (Mar 6). Prices have been little changed since August, after a 4.1 per cent drop in the preceding six months.

The increase is the best since January last year, and signals that the residential property market is beginning to respond to falling interest rates. The Reserve Bank of New Zealand has cut the Official Cash Rate by 175 basis points since August to 3.75 per cent and last month signalled a further 50 points of reductions in coming months.

“It was always likely that the property value falls in 2024 would come to an end at some stage in early 2025, given the extent of interest rate cuts,” said Kelvin Davidson, chief property economist at CoreLogic in Wellington. “Conditions do now seem in favour of gradually rising values over the medium term, with mortgage rates having fallen alongside better news from the underlying economy and labour market.”

The interest rate on a one-year fixed-rate home loan is as low as 5.19 per cent at one local bank, down from an average of 7.3 per cent at the start of 2024.

February house prices were 3.8 per cent lower than a year earlier compared to a 3.9 per cent drop in January, the report showed. BLOOMBERG