Where on earth did January go?! The first few weeks of the year have flown by, but no complaints. Better busy than not, after all.
Let’s get straight into it.
First up, what's the outlook for this year?
If I had to sum it up in one word, it would be ‘gradual’.
The first half of 2025 is likely to be steady rather than spectacular, with the usual global uncertainties—amplified by all the change happening under President Trump—adding a layer of unpredictability.
What’s been happening in the housing market?
The wider market has seen a bit of stability return, however there is still a lot of slack to be taken up. Stock levels remain high, which is keeping prices in check—a good thing for those looking to purchase this year.
Wellington continues to feel the impact of government and private sector cutbacks, and where there’s uncertainty around household income, borrowing and spending follow suit.
For those who love the numbers (courtesy of REINZ):
- The average number of days to sell in December 2024 was 51 days in Wellington, compared to a national average of 50 days.
- Wellington’s median house price dropped 5.4% year-on-year and 3.4% for the last 3 months into December 2024. Nationally, prices dipped 0.6% annually but rose 0.1% in the last quarter.
- Sales in Wellington fell to 577 in December 2024, down 26% from the previous month, with a 12% national drop.
For first home buyers with job security, conditions are looking favourable.
Interest rates – what’s next?
We have far smarter people at Squirrel diving deep into this (cue JB), but the gist of it is that economists are currently steering clear of firm predictions thanks to uncertainty around US tariffs and their flow-on effects for the global economy, including New Zealand.
In the short term, we may see some cheaper prices on imported goods as US trading partners look to move inventory to more favourable markets. But, longer term, the moves currently being made could drive inflation in the US, which in turn could impact our longer term interest rates.
A 0.50% cut to the Official Cash Rate (OCR) in February is still on the cards, with many expecting a total of 1% to come off in the first half of the year—following the series of reductions we’ve had already, totalling 1.25%.
Whether or not this has the intended impact is yet to be seen, and it’s looking increasingly unlikely unfortunately.
The big question remains: When should mortgage borrowers start locking in for longer terms?
Nobody has a definitive answer in this space, so taking a hedged approach (i.e. splitting between short and long-term rates) might be worth considering.
What does this mean for you?
- The property market remains favourable for first-home buyers.
- Those looking to move from their current property should be prepared for longer selling times. Getting your property in tip top shape will be key to ensuring a smoother sale.
- Investors are still weighing up options with property expenses rising at a slower pace than before.
- Interest rate cuts may not be as significant as some hope, and net migration has slowed, which could have flow-on effects for the housing market.
Keep an eye on the Reserve Bank’s announcement on 19 February. The commentary will be more telling than the rate cut itself when it comes to predicting what could happen with fixed-rates moving forward.
Keep on keeping on, and as always get in touch if there’s anything we can assist with,