House values, rents to drop: Could 2025 be the year to buy?

OECD data shows New Zealand homes are still among the least affordable in the developed world. Photo / Ted Baghurst

For better or worse, property has been a cornerstone of our economy for decades.

But price rises now put home ownership out of reach for many Kiwis.

Things could be changing, though.

Wellington City’s new rateable valuations show that, on average, house values have plummeted 24.4% since 2021.

Co-host of Opes Partners’ The Property Academy Podcast, Ed McKnight told The Front Page the dive could be put down to the city going through two “booms”.

Property prices in the capital took off in 2016, he explained, and then the pandemic brought a second upswing in 2020.

“That is the reason why from peak to trough Wellington City prices dropped 27%, which is more than the 18% average around the country. Lower Hutt had it even harder. They dropped 30% and Upper Hutt dropped about 29%,” he said.

McKnight encourages people not to worry about their CV – because it doesn’t necessarily determine what your house is going to sell for.

“Only about just over 50% of properties will sell within 10% of whatever price is shown.”

The value drop comes as the city – which once made headlines for its hotly contested rental market – is now seeing landlords fighting to fill their homes.

“Looking back at 2023, if you looked at the surveys of landlords, way more landlords would say it’s really easy to get a tenant compared to those who say they’re finding it a bit tough...

“At the moment, a net 20% of landlords are saying it’s hard compared to those saying it’s easy. And we are seeing that turn into flat rents in most of the country... We’re actually seeing in some parts, like Wellington, that rent is just slightly decreasing at the moment,” he said.

Housing supply – or lack thereof – has plagued the New Zealand housing market for decades.

But, McKnight said supply has increased a lot.

“We had a massive building boom during the Covid years... The long-term average is about every year, we build six houses for every 1000 people.

“During the big Covid boom, we got up to 10 houses per 1000 people. We were building two-thirds more houses than normal during that period,” he said.

CoreLogic predicts property sales volumes will rise from around 80,000 to 90,000 this year – citing lower mortgage rates and the anticipation of a growing economy.

But, they do mention further job losses on the horizon might dampen the market.

“What’s really fascinating [is that] as we are seeing those property volumes, those property sales recover quite strongly. It’s up 13% year on year, but we are not seeing that translate into higher prices for most of the country.

“Now that’s good if you’re a buyer because there’s a lot of stock out there on the market.

“There is a backlog of properties that need to be sold. I think they will start to drop down, but I don’t think there’s going to be huge pressure for buyers in terms of lots of competition because we’ve got a backlog to work through.

“Just to put that into context, if a single property was not listed on any of those online platforms for the next half a year, it would still take that half a year to clear and sell all of those properties that are currently listed online, because that’s how many there are,” he said.

Listen to the full episode to hear more about personal property predictions for 2025 and how QV

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.

You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.