Prices now expected to rise just 4.5% in 2025
New Zealand’s largest lender, ANZ, has revised down its house price forecast for 2025, citing rising inventory and tepid market momentum.
In its latest Property Focus Report, the bank now expects prices to rise 4.5%, down from its previous 6% forecast.
ANZ economists are expecting “more meaningful lifts in house prices in the second half of the year but are now forecasting a lift of 4.5% rather than 6%,” RNZ and interest.co.nz reported.
Other projections remain slightly more optimistic. A recent Reuters poll points to a 5% rise in house prices this year, while BNZ is forecasting a stronger 7% increase.
House sales climb, but listings outpace demand
While house sales rose 3.4% in March, the strong influx of new listings gave buyers greater choice, which is keeping a lid on prices. The total housing stock on the market increased 0.6% during the month (seasonally adjusted), marking a 10-year high.
“March saw another strong flow of listings coming onto the [housing] market,” ANZ said. “The total amount of stock on the market lifted another 0.6% in March (seasonally adjusted) and is at the highest level in 10 years.”
In Auckland, total housing stock rose 1.2%, while sales increased by just 1%, pushing inventory levels to their highest since 2011.
“Total housing stock in Auckland, which is currently at the highest level going back to 2011, lifted another 1.2%, as new listings outpaced house sales growth of 1% in the region (seasonally adjusted),” ANZ said.
Buyers in control as housing market remains subdued
With supply outpacing demand, ANZ said buyers are in a strong position, limiting upward pressure on prices, RNZ and interest.co.nz reported.
“Plenty of choice for buyers means little upward pressure on prices,” ANZ said. “Indeed, of late we’ve seen house sales and house price inflation heading in different directions. It’s not surprising that sellers have become more realistic with their asking prices in this environment.”
The sales-to-listings ratio, often used as a leading indicator of price momentum, remained weak.
“A decent bounce in sales volumes in March was largely offset by another lift in listings, and the sales-to-listings ratio remains consistent with lacklustre growth in house prices in the near term,” ANZ said.
Days to sell flat, auction clearance rates steady
The median days to sell remained steady at 46 (seasonally adjusted), significantly higher than the long-run average of 29.
“It’s been hovering around that level for several months now,” ANZ said. “While that’s consistent with the housing market having stabilised, we’d need to see median days to sell beginning to fall before one could conclude the market is on a tightening trajectory.”
Auction clearance rates have also remained flat at around 40%.
Rate cuts expected to support housing market later in 2025
Despite short-term weakness, ANZ sees longer-term support for the housing market from expected interest rate cuts. The bank now forecasts two additional 25-basis-point cuts to the official cash rate, taking it from 3.5% to 2.5% — where it is expected to remain for at least a year.
“That will underpin housing market momentum further out,” ANZ said. “It’s important to stress that while the here and now remains tough-going the economy is on an improving trajectory.”
Global risks still loom
However, ANZ cautioned that global uncertainty — including economic “ructions” — remains a headwind for New Zealand’s recovery, including the property sector.
“We aren’t through it yet,” it said.
