House price freefall finished

New Zealand house prices have fallen 17% from their peak and appear to have bottomed out in May 2023, according to QV. Since then, prices have increased by 1.85%. The freefall has stopped, but today’s vendors aren’t exactly celebrating with champagne just yet.

The average home is now worth $909,671, which is unchanged compared to the same time last year. After years of bad dreams about shrinking net worth, we’ve hit the plateau phase.

Asking prices slide

In the current housing market, asking prices and market values can differ, with asking prices typically being higher. But it looks like vendors are getting more realistic, with asking prices continuing to slide.

The national average asking price has declined for the second month in a row, from $852,288 in May to $820,727 in July – a drop of $31,561 (-3.7%) in just two months.

In Auckland, the drop is particularly pronounced. Asking prices have declined for five consecutive months, from $1,082,500 in February this year to $969,695 in July – a decline of $112,805 (-10.4%) in the last five months.

Regional variances

If real estate were a reality TV show, Wellington would be voted off the island. Home values in Wellington City dropped 3.3% to $922,101, which is 6.7% lower annually and 27.3% below the nationwide market peak. Ouch.

Meanwhile, up north, house values are rising. The upswing in the Northland market continued in the July quarter but at a slower pace, with values rising 1.2% to $739,755. Down south, Queenstown values are 16.9% above the market peak – because, apparently, even in a downturn, people still want their million-dollar mountain views.

Will the latest rate drop change things?

While it’s good news for borrowers – with possibly more to come (pundits are picking another 25-basis-point drop in the OCR later this year) – consumer spending remains sluggish, jobs are in decline, unemployment is rising, wages are not keeping up with rising costs, consumer sentiment remains weak, and thousands of Kiwis are leaving the country. In summary: New Zealand’s economy isn’t crash hot. So, no, the housing market is unlikely to change much under the current conditions.

Another Tony Alexander survey of real estate agents bears this out. More than half (54%) sense buyers are worried about their jobs. This level stood at only 14% at the start of 2024 and peaked at 56% in the middle of last year. So, it can change quickly but, for now, job insecurity remains high, which will suppress home demand in the remainder of 2025.

But things are looking up for 2026

Infometrics has doubled its growth forecasts for New Zealand’s economy, painting a much rosier picture for 2026 than anyone dared hope six months ago.

We’re talking about real GDP growth rebounding to 1.4% in 2025 and accelerating to 2.7% in 2026 – a decent turnaround from the 0.5% contraction estimated for 2024. To put that in perspective, we’re going from economic flatline to solid growth in the space of two years.

Infometrics’ chief forecaster Gareth Kiernan calls it an “old-fashioned pre-nineties-style” recovery, with farmers’ incomes boosted by high export prices, eventually flowing through to provincial cities and then the main centres.

It’s the kind of stable foundation on which property values can grow. The agricultural export boom could mean rural property markets lead the charge, while Auckland’s infrastructure spending provides urban opportunities. Wellington? Well, someone has to be the cautionary tale.

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