New Zealand’s property market has shown tentative signs of stabilising, with values rising slightly in recent months, although uncertainty continues to weigh on the outlook.
According to Cotality, the national median property price increased by 0.2% in March, matching the same rise recorded in February. While modest, these back-to-back gains may signal a potential shift after a prolonged period of softness, with the market down 1.3% over the year.
However, the increases come against a backdrop of heightened global uncertainty, following the outbreak of conflict in the Middle East at the end of February.
Early signs of a turning point?
Cotality Chief Property Economist Kelvin Davidson said the recent data would attract attention from those looking for a change in direction – but he cautioned against reading too much into the figures.
“The increases in national values in the past two months clearly remain small and have only made a minor difference to the drop from early 2022’s peak,” he said.
“The Iran conflict is throwing an extra layer of uncertainty over everything. In the property market, values were already still proving slow to respond to the falls in mortgage rates since mid-2024 and the nascent economic recovery.”
Mr Davidson said confidence remained a key missing ingredient – “and now, in light of the latest conflict and sharply higher fuel prices, it’s difficult to see housing sentiment or property values lifting sharply in the near term.”
Interest rates and borrower behaviour
Mr Davidson noted that the Reserve Bank of New Zealand remained on high alert, and that mortgage rates were influenced by global conditions as well as domestic policy.
“Global uncertainty stemming from the Iran conflict and concerns about wider inflationary pressure have already seen interest rates rise in world money markets, and that’s flowed through to mortgage rate lifts at some New Zealand banks,” he said.
As a result, many borrowers have recently shifted towards fixing their loans for longer terms to gain certainty.
What this means for buyers
Despite the uncertainty, Mr Davidson said there are still opportunities in the market.
“Of course, there are always two sides to the coin, and while some sellers/owners may not be too pleased with current housing conditions, first home buyers are capitalising – provided that they feel secure about their jobs in this current uncertain environment.”
For buyers, this highlights the importance of balancing opportunity with caution.
Understanding how market conditions and interest rate trends affect your borrowing options can make a real difference. Contact us, and we can discuss the right strategy for your situation.
