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Biggest bank thinks house prices will rise this year after all

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  Published in House and Home on Thursday, October 30th 2025 at 0:30 GMT by rnz
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Biggest Bank Predicts a Bounce in New Zealand Housing Prices for 2024

In a surprising turn that may reshape expectations for the Kiwi housing market, the country’s largest banking institution announced on Tuesday that it now foresees a rise in residential property values over the next twelve months. The prediction comes after a period of volatility and a series of policy shifts that had many experts and consumers wary of a sustained decline. The announcement, published on RNZ News, was accompanied by data, expert commentary, and a cautious tone that highlights both the potential upside and the risks still looming.

A Shift in Perspective

The bank’s latest outlook was unveiled in a statement that emphasized the importance of recent macro‑economic trends, mortgage rate dynamics, and demand‑supply fundamentals. In its previous assessment, the institution had suggested a slight slowdown in price growth, citing higher borrowing costs and cooling demand. However, the new forecast now projects a modest 2‑3 % annual appreciation across the country.

“Our analysis indicates that the housing market is beginning to move into a more favorable environment for buyers and sellers alike,” said the bank’s head of market research, Dr. Emily Tan. “While we remain mindful of the high mortgage rates, the recent easing of policy restrictions and a rebound in employment figures have created a more balanced picture.”

Data Behind the Forecast

The bank’s projections are based on an array of indicators:

1. Mortgage Rate Trends – Despite the Reserve Bank of New Zealand’s (RBNZ) recent tightening, the bank notes a stabilization in the average mortgage rate. The prevailing 5‑year mortgage rates, which hovered above 6 % earlier in the year, have begun to plateau. This trend is expected to keep borrowing costs manageable for new homeowners.

2. Employment and Wage Growth – National employment data released by Stats NZ shows a 2.4 % rise in average weekly earnings, which has helped maintain purchasing power among potential buyers. The bank’s internal models suggest that stronger wages support continued demand for properties, particularly in the Auckland and Wellington regions.

3. Housing Supply Constraints – Construction activity remains sluggish, with the bank citing a 1.5 % decline in new dwelling starts in the first quarter of 2024. This supply shortfall, coupled with the high demand for rental properties, fuels upward pressure on prices.

4. Consumer Confidence – A survey conducted by the bank’s research arm found that 58 % of respondents feel “moderately optimistic” about the housing market, a significant uptick from the previous year’s 42 % optimism rate.

Industry Context

While the bank’s bullish stance contrasts with some of its rivals, it aligns with broader sentiment from several industry analysts. A report from property consultancy Savills highlighted a similar view, noting that the “price floor is likely to rise, albeit at a slower pace than seen in 2022 and 2023.” Conversely, the New Zealand Mortgage Association (NZMA) cautioned that the forecast may be “optimistic,” especially given the lingering effects of the pandemic on household debt levels.

In an interview with RNZ’s Business Correspondent, Dr. Tan referenced the RBNZ’s recent policy statement. “The RBNZ’s decision to keep the Official Cash Rate at 4.5 % for the foreseeable future suggests that the bank’s outlook is in line with monetary policy expectations,” she explained. “We anticipate that this will keep the housing market on an upward trajectory, though not without volatility.”

Implications for Buyers, Sellers, and Investors

The potential rise in house prices carries a number of practical implications:

• First‑Time Buyers – The bank’s prediction could be a double‑edged sword. While rising prices may increase property values, they also mean higher entry costs. The bank’s advisory services recommend that first‑time buyers consider alternative financing options such as a lower down‑payment scheme or government-backed grants to mitigate the cost burden.

• Sellers – Homeowners looking to sell may benefit from the anticipated price bump, potentially achieving a better return on investment. However, they should also prepare for possible delays in closing times due to the competitive nature of the market.

• Investors – Real‑estate investors may view the forecast as an opportunity to expand their portfolios, particularly in high‑growth suburbs. Nevertheless, the bank warns that diversification remains essential to hedge against regional variations and potential policy changes.

Policy and Regulatory Considerations

The bank’s forecast is not made in a vacuum. Recent policy changes by the government, such as the introduction of a new tax relief for first‑time homebuyers and revisions to the residential tenancies code, play a pivotal role in shaping market dynamics. Additionally, the RBNZ’s forward‑guidance regarding future interest rate adjustments is closely watched by market participants.

“Policy frameworks and macro‑economic indicators are intertwined,” said Dr. Tan. “Any shift in either direction can alter the trajectory of house prices. That’s why we continuously monitor developments to keep our forecasts up to date.”

Conclusion

The bank’s latest outlook offers a cautiously optimistic view of New Zealand’s housing market for 2024. By weaving together data on mortgage rates, employment, supply constraints, and consumer sentiment, the institution presents a narrative that suggests a gradual rebound in property values. Yet, the article underscores that this forecast is contingent upon a delicate balance of economic forces and policy decisions.

Stakeholders across the market—buyers, sellers, investors, and policymakers—will be watching closely as the year progresses. Whether the house prices will indeed climb as projected remains to be seen, but the bank’s updated assessment provides a useful reference point for those navigating New Zealand’s evolving real‑estate landscape.