House prices in New Zealand may see a slight rebound this year, after remaining unaffected by the declining interest rates in the latter months of 2024, according to CoreLogic New Zealand.

The property agency reported that prices dropped by 3.9% last year, with values falling by 0.2% in December, marking their 10th consecutive monthly decline.

Prices saw a modest increase early last year, but buyer optimism faded as the central bank maintained high borrowing costs and economic growth stalled, Bloomberg reports.

When the central bank began lowering the Official Cash Rate in August, the property market was flooded with homes for sale, and values continued to decline.

“We suspect that 2025 could prove to be a year of conflicting forces for New Zealand’s housing market with the net result being a relatively subdued upturn in sales volumes and property values. Our expectation is that values could increase by around 5% across New Zealand as a whole,” said Kelvin Davidson, chief property economist at CoreLogic in Wellington. 

Any potential recovery in house prices would be modest compared to the previous cycle, when low borrowing costs drove a 16% increase in 2020 and a 26% rise in 2021. 

Economists predict that the Reserve Bank of New Zealand will likely reduce the Official Cash Rate to around 3% this year, a significant increase from the record-low 0.25% in 2020 during the height of the Covid-19 pandemic.

Davidson stated that lower mortgage interest rates, along with the lowest internal serviceability test rates used by banks to assess credit risk, will likely draw more people back into the property market and drive prices higher.

That said, he noted that in a weak economy, job security remains a concern for many potential buyers, and the high number of listings on the market could also limit price growth.

Barfoot and Thompson, a residential real estate agency in Auckland, reported having 5,094 listings at the end of December, a 16% increase compared to the same time the previous year.