What's what with the property market right now?

Monday, 24 March 2025

New Zealand’s property market has been on a rollercoaster ride in recent years.

From sky-high Covid prices to the post-pandemic slump, New Zealand’s property market has been on a rollercoaster ride.

But with mortgage rates falling and listings on the up, are we seeing a return to a more stable market?

Here’s what you need to know.

Is the market flooded?

With properties, yes. With buyers, not so much.

These real estate professionals knew they had a gem on their hands when they came across this two-storey Mt Victoria bungalow.

Data from CoreLogic shows there were 31,838 properties on the market nationwide in February, 26% up on the five-year average.

Although there were fewer listings in some areas (Northland and Waikato) than last year, the numbers in Canterbury, Wellington, Otago, and Gisborne were all up by 10% or more.

And what are prices like?

Still sluggish, according to REINZ data. In the year to February, the median price for New Zealand declined by 2.4%, from $791,000 to $772,000.

Excluding Auckland (which tends to skew the data with its higher prices), the median price fell by $10,000 (1.4%) from $710,000 to $700,000 compared to February 2024.

Only six out of 16 regions saw an increase in median prices compared to February 2024, with the West Coast recording the highest increase, rising 16.3% from $325,000 to $377,500.

Southland’s median price increased 9.2% year-on-year, from $430,600 to $470,000.

So it’s a buyers’ market then?

For now, yes. And with so many properties on the market, CoreLogic chief property economist Kelvin Davidson says we’re unlikely to see the power shift in the immediate future.

“The stock of listings available to purchase is currently at its highest level for this time of year since at least 2018, which means buyers can still take their time to try and achieve a deal in their favour.

Buyers are still in the power seat and that’s unlikely to change in the short term, an expert says.

“For investors, lower mortgage rates will make new property purchases more affordable, which have required significant top-ups from other income sources over the past couple of years.”

You had me at ‘lower mortgage rates’. Is there a rates war brewing?

There could well be. While most borrowers are still reluctant to fix for more than 12 months, lenders are starting to offer more tempting two and three-year rates.

Roughly 71% of existing mortgages by value are currently fixed, but due to come off those terms soon - and another 12% is floating.

Over the past few years, refixing has generally meant moving to a higher mortgage rate, but that script has now been flipped, Davidson says.

“With rate wars recently emerging among lenders offering lower two to three-year fixed rates, we could start to see a shift back towards them pretty shortly.”

How’s affordability tracking?

Nobody is saying housing is cheap, but it’s the most affordable it’s been since 2019, on some measures.

CoreLogic chief property economist Kelvin Davidson says an interest rate war could be brewing.

Lower property values, rising incomes, and, most recently, lower mortgage rates are all helping to ease affordability pressures. That’s made it easier for buyers to get into the market, Davidson says.

The fall in mortgage payments as a percentage of household income has been less marked, but it’s still at its lowest point in 3½ years.

However, to see any real and lasting progress, New Zealand needs more housing.

“The Government is focused on increasing supply, which is positive for long-term affordability. However, ongoing challenges remain as elevated construction costs and infrastructure pressures all have a material impact on access to housing.”

So, which of the main centres is the most affordable these days?

Wellington, would you believe? Property affordability in the city formerly known as the coolest little capital has returned to pre-2017 levels, with a value-to-income ratio of 6.5.

That means the average house value in Wellington City is 6.5 times its average household income, the lowest level its been since late 2016, Davidson says.

“Although Wellington City isn’t necessarily ‘cheap’ it’s more affordable than it’s been for many years.”

Affordability has also improved in Auckland where, despite a median property value of almost $1.1 million, the value-to-income ratio is 7.9, the lowest it’s been in a decade.

Tauranga is still the least affordable main centre, with a value-to-income ratio of 8.6, but that’s down a long way from its peak of 12.1 in late 2021, Davidson says.

What about renters? How are they going?

The news is far less rosy for this group, unfortunately, as it’s still an incredibly tough time to be a renter.

Data from Trade Me Property shows the national median weekly rent has risen by 25% over the the last five years, from $510 to $640.

Wellington, while it might be the most affordable main centre to buy property at the moment, is also the most expensive main centre for renters.

Median weekly rent in the capital is $665, just ahead of Auckland at $660.

Outside of the main centres, Bay of Plenty is the most expensive region for renters, at $680 per week, up 1.5% year-on-year.