Buying a house is one of the biggest dreams of many people, independence, choosing the right place, knowing that your whole life will be spent in a specific neighbourhood… But we rarely think about the investment that being able to acquire a new home means.
During 2024, this dream of many has faced new challenges because the real estate market is reflecting the ups and downs of the global economy. 2025 could be the future we have been waiting for so long, where the price of housing finally stabilizes! Below we are going to analyse the data, trends and perspectives of this important sector that we rarely take into account to know what is happening in the real estate market.
Why are house prices falling?
According to CoreLogic’s latest report, house prices nationwide fell by 0.2% in December 2024, which is the ninth consecutive time that prices have fallen since last March. This is mainly due to two factors: high mortgage rates and a job market that is not at its best…
In cities such as Auckland and Wellington, the declines are more evident. For example, house prices in Wellington fell by 0.7% in December alone, and compared to the previous year, they have fallen by 6.5%. These cities are facing problems of excess properties for sale and it is leading to citizens having less economic confidence due to cuts in the public sector. Below we leave you a table with the December price values by place.
Are there positive signs for the housing market?
It’s not all bad. Some cities like Hamilton, Tauranga and Dunedin are starting to show improvements. In December 2024, these cities saw small increases in house prices, up to 1.0%. This indicates that lower mortgage rates are starting to have a positive impact in some places, and one of the reasons why prices could stabilise is that, with rates falling, loans are becoming more accessible.
What is the end?
That many more people can be encouraged to buy houses or invest in housing. However, the main challenge of this market remains the economic issue and that is, with inflation, salaries that do not rise and the uncertainty of the future, not many people decide to buy a house at this time.
The Reserve Bank released its November data, revealing a movement of $7.4 billion, an increase of $900 million compared to the previous year. Although low-deposit loans and high-debt-to-income mortgages are under control, what really stands out is the change in variable-rate mortgages: they rose from 11% in October to 14% in November, reaching their highest point since mid-2020.
What can we expect for 2025?
CoreLogic experts predict that 2025 will be a year of opposing forces. On the one hand, low mortgage rates could boost purchases, but on the other, the weak labor market could limit how much prices can grow. Overall, a moderate 5% increase in property values is expected.
What does this mean for us?
That this could be the best time to go shopping for a home and evaluate the options we have. As prices are falling in some cities, there could be interesting opportunities to consider a purchase, but it is very important that you keep a cool head and inform yourself and make decisions based on your own financial situation!
So, 2025 is going to be full of opportunities but also challenges. The best thing is to be aware of our purchasing power and make a decision accordingly, because buying a house is not something we can decide from one day to the next, it requires time and research. Our future home is knocking at the door, we just have to do the math to open it! Good luck!