Property experts predict house prices will rise in 2025, but many factors could still affect the market. Some expect a big increase, while others are more cautious due to economic uncertainties.
House prices dropped in 2024, but changing economic conditions and government policies might cause a turnaround. Key factors influencing price increases include lower interest rates, job market trends, economic stability, and new home construction.
How Interest Rates Affect House Prices
One of the main reasons experts expect prices to rise is the fall in interest rates. Lower rates make borrowing cheaper, encouraging more people to buy homes, which pushes prices up.
The central bank’s decision to cut rates in 2024 is seen as a turning point. Historically, when rates drop, house prices go up because more people can afford loans. If borrowing costs continue to fall, more buyers may enter the market, increasing demand.
Job Market and Economic Stability
While lower interest rates are a good sign, rising unemployment could slow price growth. When people lose jobs, they are less likely to buy homes, reducing demand.
In 2024, job losses increased in several industries. If this continues in 2025, it could make home buying harder despite lower interest rates. Financial uncertainty might prevent people from making big purchases like homes.
Global Economy and Inflation
Economic problems in major countries, trade tensions, and high inflation could also affect the housing market.
If global markets struggle, it could impact jobs and incomes in New Zealand. High inflation may also slow down interest rate cuts, keeping borrowing costs high. If prices for everyday goods stay high, fewer people will have money left for home loans.
Home Building and Market Supply
The property market is also affected by the number of new homes being built. In 2024, many building companies faced financial difficulties, slowing down construction.
Fewer new homes could push prices up due to lower supply. However, if fewer people can afford to buy, overall market activity may still remain low. Long-term infrastructure planning is needed to address housing shortages.
Who Will Be Buying in 2025?
First-home buyers made up a large share of home purchases in 2024. This trend is expected to continue in 2025 as lower interest rates help new buyers afford homes.
Investors, on the other hand, have been more cautious due to high borrowing costs. However, as rates drop, more investors may return to the market, though it may take time for activity to pick up.
Final Thoughts
House prices in 2025 are likely to rise, mainly due to lower interest rates. However, global uncertainties, job market trends, and construction slowdowns will also impact the market. While some experts predict strong price increases, others remain cautious about potential risks.
People looking to buy or sell should keep an eye on market trends and economic updates to make informed decisions.