“… over the last 18 months, house prices have gone nowhere. That will change next year. Interest rate cuts will fuel confidence, and confidence will generate activity.” Jarrod Kerr, Kiwibank Chief Economist
This bold statement from Kiwibank’s Chief Economist signals positive sentiment for the property market in 2025. Kerr is predicting a 6% increase in house prices over the next 12 months.
This seems to be the consensus, more or less, amongst commentators. Westpac are forecasting up to 8% and other economists talking around 5%. Most are predicting a 0.5% decrease in the OCR come 27th November, which will have occurred in the time between writing and publishing this article. The residential real estate market in Hawke’s Bay is already seeing sizeable lifts in sales volume. While some of this increase can be attributed to the traditional spring surge, it also reflects improved economic conditions and a more positive sentiment.
The economist’s broad predictions aside, homes in the premium segment where New Zealand Sotheby’s International Realty operates are often unique and characterised by special features, views or outlooks, or location. Each home needs to be appraised very carefully and valued on its own merits. Certainly, the recent sales results from our Havelock North and Napier teams have seen a strong increase in the number of homes being sold.
From Sep-Nov (with a week remaining at the time of writing) we have brokered 94 sales, a 65% increase on the same period in 2023. I expect our November month will be the largest sales volume month in our 12-year history, and possibly our best month in sales value over that time if we can complete a couple of sales in the final week for our vendors.
The upper end of the market has been characterised by longer sales periods in recent years. However, the recent resurgence in this segment reflects a broader trend of renewed buyer confidence. This is attracting interest not only from local buyers but also from metropolitan markets as they have begun to move again, including Auckland and Wellington, as well as offshore investors.
Stabilisation in the real estate market, coupled with improved economic forecasts, has made buyers in the high-end sector more willing to transact, and either invest in premium properties once again or buy and sell in the same market, taking their lives off pause.
The investment segment of the market is also showing signs of recovery. The reinstatement of interest expense deductibility and the relaxation of credit rules are both positive developments. However, securing credit remains more challenging than it was before 2021, with new debt-to-income (DTI) regulations capping borrowing at no more than seven times income for at least 80% of investors.
As a franchise business of Sotheby’s International Realty, our agency is known for representing premium properties. Our affiliation allows us to offer clients unparalleled exposure to a global audience unmatched by any other real estate company in Hawke’s Bay, and this is a significant advantage in the upper end of the market. At the same time, we are a locally owned and operated business providing investment, jobs and support in the region.
This is why we were quick to sponsor the inaugural “The Profit Unleashed” initiative, a business event with a difference. Congratulations to Damon Harvey and his team for organising an evening with a fantastic panel of Hawke’s Bay entrepreneurs, as well as a great opportunity to network with like-minded business professionals. It was a fun event and great to be able to smile and laugh collectively, while taking away a couple of insights relevant to our business. We look forward to the next one.
Author: Instrumental in bringing New Zealand Sotheby’s International Realty to Hawke’s Bay, Fraser is an Executive Director for the NZSIR business, with franchises from Wairarapa through to Waikato. Fraser has a business degree in marketing and 25 plus years’ experience in senior sales, marketing and general management roles.
