New Zealand House Prices Dropped in 2024
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Loading... - Jeanne Abadie
- 06 Jan 2025
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In 2024, New Zealand's housing market experienced a notable decline, with the median house value dropping by $32,200 over the year, according to CoreLogic. By December, property values had fallen 0.2% for the month, marking the ninth decrease in the past ten months. Overall, this brought the median house value to 3.9% lower than a year ago and 17.6% below the post-COVID peak. However, values still remained 16.2% higher than they were in March 2020.
While the national trend showed a decline, there were regional variations in house prices. In December, some areas saw slight increases: Hamilton prices rose by 1%, Tauranga by 0.4%, and Dunedin by 0.3%. Conversely, major cities like Auckland and Wellington experienced declines, with prices falling 0.4% and 0.7%, respectively.
Over the year, Auckland's prices decreased by 6.2%, Tauranga's by 3.8%, and Wellington's by 6.5%. CoreLogic's chief property economist, Kelvin Davidson, noted that the abundance of properties for sale in Auckland, including both existing listings and new builds, was contributing to the softening of prices. In Wellington, he attributed the declines to restored housing affordability following significant price drops over the previous two to three years, alongside public sector cutbacks affecting economic sentiment.
Davidson explained that the housing market had been drifting lower since a mini-peak in February, influenced by higher mortgage rates and weakness in the labor market. He described December's mild drop as a continuation of this trend, reflecting the overall sluggish performance of the market throughout 2024. However, he also mentioned that the rate of decline had slowed recently, which could indicate that the market was nearing a floor.
Despite some signs of stabilization, job insecurity and high property listings continue to pose challenges. Davidson highlighted that these "conflicting forces" might persist in shaping the property market in 2025, with the effects of lower mortgage rates being somewhat offset by a sluggish economy and credit restrictions, such as debt-to-income ratios (DTI).
Interestingly, smaller centers showed stronger house price performance in December. For instance, Whangārei saw a 5.6% decline, Gisborne experienced an 8.9% drop, and New Plymouth was down 2%. However, areas like Napier, Palmerston North, Whangārei, and Nelson reported increases in December.
Davidson noted that the influence of lower mortgage rates might be starting to provide a subtle boost to property values in some provincial areas. He pointed out that housing affordability tends to be more favorable in these regions, supported by stable farming-based economies.
Looking forward, Davidson expects property values to lift by 5% across the country in 2025, which would represent a relatively subdued recovery compared to past cycles. He cautioned that while recent falls in property values may soon come to an end, the introduction of debt-to-income ratio rules could significantly impact the mortgage market discussions in New Zealand.
In summary, 2024 was a challenging year for New Zealand's housing market, characterized by declining values and regional disparities. As the market looks to recover, the interplay of economic factors, mortgage rates, and regulatory changes will be crucial in shaping future trends.
