New Zealand’s property market is showing signs of recovery in early 2025, with national house prices rising for consecutive months. Falling interest rates and increased buyer activity have helped drive modest but steady growth, marking a shift from last year’s downturn. However, regional variations remain significant, with some areas seeing stronger rebounds while others continue to struggle.
National Property Trends
After a prolonged period of market weakness in 2024, the first two months of 2025 have brought cautious optimism. House prices rose by 1.1% in January, followed by a 0.6% increase in February, bringing the national average property value to $967,000, according to the latest OneRoof-Valocity figures. This represents a 2.7% increase since the market trough recorded last year.
CoreLogic data also confirms the market’s stabilisation, reporting a 0.3% national rise in February—the strongest single-month increase since January 2023. Chief property economist Kelvin Davidson said the results suggest the downturn has ended, with values now 17.7% above pre-Covid levels despite still sitting 16.9% below their 2021 peak.
Buyer sentiment has noticeably improved, with more activity in the sub-$1 million price bracket. Analysts attribute this to declining mortgage rates, which have made property more affordable, particularly for first-home buyers.
Regional Disparities Emerge
While the national market trends upwards, recovery remains uneven across the country. Auckland led the way with a 1.2% increase, reaching an average property value of $1.303 million. Strong sales activity in more affordable suburbs helped drive the city’s growth.
The West Coast recorded the highest regional increase, with values rising 2.1% to $485,000—a 7.5% annual jump—confirming its status as the most affordable and fastest-growing region.
However, some areas continued to face headwinds. Canterbury’s average value fell 0.3% to $787,000, following a small rise earlier in the year. Wellington also dipped 0.6% to $859,000, though a separate CoreLogic report noted a 0.1% increase in February, marking a potential turnaround after nearly a year of steady declines.
Elsewhere, Christchurch and Dunedin saw 0.6% growth, Hamilton 0.5%, and Queenstown 0.8%. In contrast, Tauranga values slipped 0.2%, while smaller drops were recorded in Palmerston North, Hastings, and Whangārei.
What’s Driving the Market?
A combination of lower interest rates, higher listing volumes, and improved buyer confidence appears to be fuelling the recovery.
- Mortgage rates have fallen significantly since mid-2024, with banks continuing to cut home loan rates. The Reserve Bank now forecasts an Official Cash Rate (OCR) of 3% by the end of 2025, earlier than previously expected, which has encouraged more buyers to enter the market.
- Listings remain at near-record levels, with over 43,000 properties for sale nationwide. While the number of new homes listed in February was 8% lower than a year earlier, overall supply remains high, giving buyers more choice and preventing excessive price inflation.
- Increased buyer confidence is driving competition, particularly in affordable segments. Real Estate Institute of New Zealand data shows that demand remains strongest in the $500,000 to $1 million range, with more transactions occurring even as high-end sales decline in market share.
Despite these positive signals, affordability remains a major concern. Many potential buyers are still priced out, and with debt-to-income ratio limits set to be introduced, rapid price growth is unlikely.
Future Outlook: Moderate Growth Ahead
Market analysts predict steady but restrained growth throughout 2025. CoreLogic forecasts a 5% increase in national property values for the year, while Westpac expects 8% growth, and ANZ projects a 6% rise. However, economists caution that several factors could slow momentum.
- Affordability pressures may cap how quickly prices can rise, especially if wages fail to keep pace.
- High listing volumes could prevent a return to the rapid price inflation seen in past upcycles.
- A softening labour market may reduce demand, particularly if economic conditions weaken further.
CoreLogic’s Kelvin Davidson believes the market will continue to improve but a runaway boom is unlikely. “there are likely to be more property sales in 2025 than 2024, with values rising,” he said, “But there are also enough reasons out there to think this upturn will be more muted than in the past.”