House prices in New Zealand are facing a potential downturn, according to industry experts, which could present an opportunity for first-time homebuyers. This prediction comes from David Cunningham, CEO of Squirrel Mortgage Brokers, who points to several factors contributing to the anticipated decline. These factors include low consumer confidence, a steady supply of new buildings, and low immigration levels.
Cunningham's outlook is supported by recent surveys conducted by economist Tony Alexander, which reveal that 44% of real estate agents believe prices are currently falling in their respective areas. This figure represents the worst result since 2022, indicating a growing sentiment among agents that the market is cooling down.
The concerns of buyers, as reported by the agents, align with Cunningham's perspective. Rising interest rates, employment issues, and the prospect of falling house prices are the top worries for prospective homebuyers. Additionally, a net 51% of agents noted a decline in attendance at open houses, further suggesting a slowdown in market activity.
The Reserve Bank's financial stability report provides context for these developments. It highlights that house prices have been relatively stable over the past three years, with a higher number of houses on the market keeping prices in check. However, the bank also acknowledges the risk of a correction, particularly if rising mortgage rates continue to impact the market.
ANZ's economists offer a more optimistic outlook, suggesting that prices were on an upward trajectory before the recent fuel shock. They predict a slight decline in house prices over 2026, citing challenges such as rising inflation and interest rates. The potential introduction of a capital gains tax following the election adds further uncertainty to the market.
In summary, the housing market in New Zealand is experiencing a period of adjustment, with experts anticipating a downward trend in prices. This shift could create a favorable environment for first-time homebuyers, but it also raises questions about the broader economic implications and the potential impact on the housing market's recovery.
