House values are still expected to increase in the second half of the year, but the bank now anticipates a more modest annual rise of 4.5 per cent, down from its previous estimate of 6 per cent.
The adjustment follows an analysis of recent housing market trends, which suggest a stabilising but sluggish environment. House sales rose by 3.4 per cent in March, indicating buyer activity. This was counterbalanced by a strong wave of new listings, giving buyers greater choice and reducing urgency in the market.
This increase in property stock has brought total listings to their highest level in a decade. Auckland, in particular, has seen a surge in housing availability, reaching levels not seen since 2011. With more homes on offer, sellers are reportedly adjusting their expectations.
The sales-to-listings ratio, a key market indicator, supports this moderate outlook. Sales volumes bounced in March, but the continued rise in listings diluted any upward momentum. This ratio is often viewed as a leading sign of price trends over a three to six-month period. It currently suggests muted growth in house prices over the near term.
Other indicators also point to a market that has found its footing but lacks strong forward momentum. The auction clearance rate has held steady around 40 per cent, reflecting a cautious but consistent level of engagement. Meanwhile, the median number of days to sell remains at 46, well above the long-term average of 29. This figure has been relatively unchanged in recent months, reinforcing the notion that the market is not yet accelerating.
Looking ahead, the bank’s economists expect the Reserve Bank of New Zealand to lower the official cash rate twice more, bringing it down to 2.5per cent. This lower interest rate is expected to provide a stronger foundation for the housing market, supporting a gradual improvement in activity over the medium term.
However, broader uncertainties remain. Ongoing global economic instability continues to pose risks, and its impact on New Zealand’s domestic economy and property market is still unfolding. Despite these challenges, economists believe the national economy is on an upward path, though the housing sector may take time to reflect that trend.
In summary, while New Zealand’s housing market is showing signs of stability, it is not poised for rapid growth in the near term. The combination of high stock levels, steady sales activity, and cautious buyer sentiment suggests a measured recovery rather than a sharp rebound. The coming year is likely to bring modest price increases, with stronger momentum expected only once excess inventory is absorbed and interest rate cuts take effect.
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