Home buyers are being cautious in current slow housing market

Residential property values have seen minimal fluctuations during the initial quarter of the year in light of the ongoing soft market dynamics. James Wilson, the QV operations manager, observed that property values have remained relatively steady throughout the first quarter of 2025, with slight fluctuations from month to month. The most recent data from the QV House Price Index indicates a marginal increase of 0.2 percent in home values, culminating in a national average of $903,928 during the March quarter, representing a slight decline from the previous quarter.

Despite the significant reduction in interest rates, potential buyers are grappling with the prevailing economic uncertainties. Concerns related to job security and a noticeable uptick in unemployment rates have been key factors in instigating caution among buyers, leading them to adopt a risk-averse approach to market engagement. A surplus of available properties for sale further contributes to this sentiment, creating a scenario where cautiousness prevails in the property market.

Various regions across New Zealand, such as Whangarei, Rotorua, Nelson, and Christchurch, have reported average home value growth exceeding 1 percent in the first quarter. Conversely, cities like Auckland, Wellington, and Hamilton saw minor declines in home values, while Palmerston North and Dunedin have observed steady property values. This trend is partly due to an abundance of properties listed for sale, coupled with minimal competition, which serves to maintain current price levels.

First-home buyers are benefiting from favorable market conditions where prices have largely plateaued, allowing them to enter the property market more easily. Investors, particularly in response to amended interest deductibility rules and recent interest rate decreases, are showing renewed interest in property investment. Despite this, a cautious approach towards the economy tempers the market speculation.

The prevailing market outlook indicates a continuation of the flat trend over the next few months. While signs of economic recovery are evident, it may take some time for these developments to manifest fully in the market. A surplus of available housing stock means that potential homebuyers will have a wider array of choices to consider. In the long run, a rebound in home value growth is anticipated when the economy stabilizes, and the excess housing stock diminishes.

Overall, the property market landscape is characterized by cautious optimism as buyers navigate the uncertainties of the current economic climate. The trend of steady property values, surplus housing stock, cautious buyers, and growing investor activity paints a nuanced picture of the ongoing dynamics in the residential property market.