As more new and existing borrowers begin to benefit from lower mortgage rates following the Reserve Bank of New Zealand’s (RBNZ) cutting cycle, market turnover levels and property values should continue to trend higher in the coming months.
The ‘Chart of the Month’ from CoreLogic NZ’s March Housing Chart Pack looks at RBNZ data, revealing that, in January, only 10% of new borrowers across the country opted for fixed terms longer than 12 months. (ref. https://www.corelogic.co.nz/news-research/reports/housing-chart-pack )
In other words, 90% of borrowers chose a floating or short-fixed rate (6-12 months).
CoreLogic NZ Chief Property Economist Kelvin Davidson said while loans fixed for longer than 12 months remained unpopular in January, the recent emergence of ‘rate wars’ suggests borrowing behaviour will be something to watch closely.
“However, that situation has now turned around again, and with rate wars recently emerging among lenders offering lower 2-3 year fixed rates, we could start to see a shift back towards them pretty shortly.
“Both for new borrowers and those repricing existing loans. In other words, the fixation with short-fixes might be about to come to an end,” Mr Davidson said.
He added that loan sizes remain relatively low in compared to incomes, meaning debt-to-income (DTI) ratios are under control.
“For investors, lower mortgage rates will make new property purchases more affordable, which have required significant top-ups from other income sources over the past couple of years.”
Overall, Mr Davidson predicts that 2025 is likely to see a subdued upturn in the property market.
“We’re just at the beginning of seeing the first clear signs that the downturn in property values has come to an end.”
“The CoreLogic Home Value Index recorded a 0.3% rise in February, with Christchurch and Dunedin both increasing by 0.6%, and even the previously weak Wellington area seeing a mild 0.1% lift.”
“Nationally, property values could rise further by around 5% this year,” he concluded.
Highlights from the March 2025 Housing Chart Pack include:
New Zealand’s residential real estate market is worth a combined $1.64 trillion.
The CoreLogic Home Value Index shows property values across New Zealand increased 0.3% in the month of February. Over the three months to February, there was a minor 0.1% rise in median property values across NZ.
Inflation is firmly back in the 1–3% target range, and with February’s 0.5% cut, further OCR reductions seem likely in the coming months.
Download and subscribe to the monthly CoreLogic Housing Chart Pack at corelogic.co.nz/news-research/reports/housing-chart-pack.
