Kelvin Davidson: Cotality's Chief Property Economist on house prices falling 1% in 2025

New Zealand may be in for a more positive property market in the new year.  

Cotality’s January Home Value Index shows that property values were down 1% in 2025 – a drop of 17% from the 2022 peak. 

Regional performance varied, with Aukland and Wellington remaining weak, but Southland districts and provincial centres such as New Plymouth and Queenstown seeing increases.  

Cotality’s Chief Property Economist Kelvin Davidson told Andrew Dickens that the reason they’re forecasting increases is because a number of factors that restrain house prices are starting to turn around. 

He says mortgage rates are down, the economy is turning around, and unemployment should come down, which should give households a bit more confidence to act in the housing market.  

LISTEN ABOVE 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:09):
You're listening to a podcast from News Talks. It'd be
follow this and our wide range of podcasts now on iHeartRadio.

Speaker 2 (00:16):
So the numbers are in and we may be in
for a more positive property market this year. Totality's generally
Home Value Index shows property values were down one percent
in twenty twenty five. That is a drop of seventeen
percent from the twenty twenty two peak, but regions in
some cities point to recovery in twenty twenty six. Is
this true? Is this a mirage? We're joined by Totality

(00:38):
chief property economist Kelvin Davidson Halla Calvin Gooday, we've only
seen nationwide declines over the last few years, so why
are we forecasting increases.

Speaker 3 (00:48):
I just think some of those factors that have been
restraining house prices in the past couple of years are
are starting to turn around, and we know more which
rates it down. Of course that's been in place for
a while, but the biggies economy, it looks pretty clear
now the economy is turning around. Unemployment right, should turn
down this year, so I think it'll get the house sold.
It's a bit more confidence and they might be put
in to act in the housing market more.

Speaker 2 (01:09):
So, there are some centers that are looking up that
there are others that seem to be a bit of
a lost cause. Does Auckland a bit of a lost cause?

Speaker 3 (01:16):
Well, it might be a bit strong, but certainly Auckland
has been underperforming the other parts of the country. And
I think if you want to look at that in
a positive way, because of course there's always positive and negative,
two sides to the corn in the housing market. But
one thing is that it shows what happens when you
can raise supply. We've seen it in Canterbury over the
past of the ten to fifteen years. Seeing in Auckland

(01:36):
now when you get more houses you can keep housing
affordability a bit more favorable and keep house prices in check.
So I think that's a good illustration again and what
supply can do.

Speaker 2 (01:46):
We always wanted a crash, I mean some elections having
fought on this sort of thing, we wanted a correction
that then, of course when it happened, we all went oo,
this is not very nice at all. What do you
think the new normal will be? Will we go back
to the endless profits on property property or do we
think or will we get a slowly accruing market.

Speaker 3 (02:06):
Yeah, I think it's probably more likely to be slower
than it has been in the past. And well, I've
said the economy is picking up this year, that should say,
but a house price growth, I think it's probably going
to be pretty modest. Part of that is to do
with the debt to income ra share restrictions. Part of
that's to do with more supply than we've had in
the past relative to our population. So those are sort
of near term factors. But then in the longer term

(02:28):
we can't have interest rates trending down anymore. It looks
like the government, well it has to stick through the
political cycle, of course, but the government's pushing very hard
on housing supply. We've got those learning restrictions in place
for the ose tech system might be a bit less
favorable in future, capital games, text, these sorts of things. So, yeah,
we've been talking for a while now about house price

(02:49):
growth in future. Then house price growth in future that's
a bit lower than it has been in the past,
So still a bit of growth, but less sin it's been.
So I think a lot of people I think we'll
be starting and say, well, actually that's a pretty good thing,
and good stuff.

Speaker 2 (03:01):
Kelvin Davidson is from Cotality. He is the chief Property Economist.

Speaker 1 (03:06):
For more from news talks, there be listen line on
air or online, and keep our shows with you wherever
you go with our podcasts on iHeartRadio