How long until New Zealand house prices return to their peak? Agent says: “If you don’t buy now, you’ll regret it later!”

How long until New Zealand house prices return to their peak?

 

The latest OneRoof-Valocity house price data shows New Zealand’s average property value peaked at NZ$1,098,000 in February last year, but has since fallen more than 12%, or NZ$140,000, to NZ$958,000. Although the rate of decline is slowing, values have yet to bottom out.

 

Economists and market commentators say there are so many uncertainties around when the market will bottom out and recover that even the best forecasters struggle to predict it. However, house values will not return to their peak until at least 2024–2025, and possibly later.

 

ANZ chief economist Sharon Zollner does not expect house values to recover in the short term. “Our forecasts only go as far as the end of 2025, when values will still be 16% below their peak,” she said. Net migration was currently “very strong”, which could prompt a rapid recovery in values, but deteriorating economic conditions and recessionary pressures could prolong the recovery.

 

Valocity head of valuations James Wilson expects house values to remain flat for the next year or longer before climbing again.

 

“By April 2024, we could see signs of nationwide growth of 2% to 3%, with some market segments potentially growing by 5% to 6%.”

 

Even if house values rebound, it could take considerable time to return to the highs of late 2021. Wilson said the post-pandemic housing boom, when average property values nationwide surged more than 40% in a short period, was driven by ultra-low interest rates and relaxed lending restrictions, circumstances unlikely to be repeated.

 

He said the speed of the market turnaround would depend on several factors, including cuts to the official cash rate and investors returning to the market in large numbers. “When they re-enter the market, those slower-growing markets could see modest increases,” Wilson said.

 

Markets such as Auckland and Wellington, where values fell sharply and rapidly, could take longer to return to their peaks — potentially three to four years.

 

“The point to emphasise is that markets will not all start growing at the same time or at the same pace. We could see more variation between market segments than ever before.”

 

Ray White chief economist Nerida Conisbee said a return to post-pandemic peaks by the end of 2024 was possible. “If you look at the speed of Australia’s recovery, you can see that it isn’t unrealistic,” she said.

 

Australia’s property market did not rise as rapidly as New Zealand’s during the post-pandemic boom, but house values there have already begun showing signs of recovery. “Australia has strong population growth, an expensive rental market and a mining boom, all of which have increased housing demand,” she said.

 

Bayleys head of insights Chris Farhi believes house values could return to 2021 levels in 2025. “Historically, house values have been very difficult to forecast, but if you look at the trajectory of New Zealand’s house price index between 2000 and 2020 and project that trend forward, we could reach the 2021 peak around the middle of 2025,” he said.

 

Economists and market commentators suggest New Zealand house values may not return to their peak until 2024–2025, or even later. Although the rate of decline is slowing, values have yet to bottom out. Regions have been affected differently by the property market downturn, and future movements will depend on many factors, including interest rate changes, migration trends and investor behaviour. The recovery may therefore show greater variation between market segments.

 

For homeowners, a return to peak house values still seems a long way off. For prospective buyers and investors, however, now is actually a good time to act.

 

“If you don’t buy now, you’ll regret it later”

 

House values across New Zealand are still falling. Wellington continues to record the largest decline, followed closely by Auckland.

 

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Wellington’s average property value has fallen 23%, or NZ$267,000, since reaching a record NZ$1,124,000 in March last year.

 

Auckland’s average property value has fallen 17.2%, or NZ$272,000, to NZ$1,308,000. Canterbury’s market conditions have been less severe: since peaking at nearly NZ$800,000 in June 2022, its average property value has fallen just 5.4%, or NZ$43,000, to NZ$755,000.

 

Professionals Red Coats Lower Hutt general manager John Ross said some buyers acting now were migrants who had secured residency and worked hard to save. Those who did not act now could regret it in the years ahead.

 

“Some people will clap their hands and say, ‘Wow, we timed our property purchase so well’, while some investors will look back on this period and say, ‘Why didn’t I buy more? I didn’t realise how good the prices were at the time.’”

New Zealand house values may take several years to return to their peak, but that also means people buying now have an opportunity to benefit in the years ahead. During this market trough, buyers and investors should closely monitor market developments to ensure they seize this rare buying opportunity.