REINZ HPI Decline Signals Market Transition Amid Regional Divergence and Resilient Demand

The New Zealand housing market in March 2025 presented a paradox: rising sales volumes alongside price declines, painting a picture of a sector in flux. The REINZ House Price Index (HPI) fell by 0.7% year-on-year (YoY), marking its lowest level since early 2021, while national residential sales surged 12.8% to 7,640 transactions. This juxtaposition underscores a market balancing between buyer resilience and lingering inventory pressures.

A Market in Motion: Sales Rise, Prices Lag

The uptick in sales reflects pent-up demand driven by falling interest rates and competitive pricing. Median home prices dropped 1.4% nationally to $790,000, with regional disparities starkly evident. The West Coast defied the trend, posting an 11.5% YoY price increase to $412,500, while Nelson saw a sharp 11.4% decline to $640,000. This divergence highlights how geographic factors—from remote living trends to local economic conditions—are reshaping value.

The HPI’s decline, calculated using the Sales Price to Appraisal Ratio (SPAR) methodology, accounts for property attributes like land size and bedrooms, offering a more nuanced view than median prices. This adjustment reveals sustained downward pressure on property values, particularly in regions like Wellington and Bay of Plenty, where HPIs fell 1.8% and 1.2%, respectively.

Inventory Overhang and Buyer Power

High inventory levels—up 10.9% YoY to 36,870 properties—continue to weigh on prices. Taranaki and Otago have seen inventory growth for over three years, while Wellington’s listings have expanded by over 20% YoY for 11 consecutive months. This oversupply has extended the median days to sell to 41 nationally, up three days from March 2024.

Acting REINZ CEO Rowan Dixon noted buyers now have “easy alternatives if they miss out,” a shift from the frenetic bidding wars of 2021. Auction activity dropped slightly (1,204 in March 2025 vs. 1,162 in 2024), but open home attendance remains strong, signaling persistent demand.

Regional Spotlight: Winners and Losers

Southland’s HPI has risen for nine consecutive months, buoyed by strong buyer interest in affordable rural and coastal properties. Meanwhile, Tasman smashed sales records, hitting its highest March count since records began, while Nelson’s median price collapse reflects oversupply and reduced demand from expatriate buyers.

The West Coast’s 11.5% price surge since 2019 contrasts sharply with Auckland’s modest 10% growth, underscoring how affordability and lifestyle preferences drive regional performance. Canterbury and Taranaki, however, remained stable, suggesting these markets may offer safer bets for investors seeking steady returns.

Outlook: Caution Meets Optimism

Analysts anticipate a cautious stabilization in 2025, with ANZ forecasting a 6% national price rebound by year-end as the OCR drops and credit eases. Yet risks persist: high inventory levels, potential labor market softening, and affordability constraints could prolong the correction.

Investors should focus on regions balancing growth and affordability—Southland and the West Coast, for instance—while avoiding areas like Nelson, where overvaluation and weak demand persist.

Conclusion: Navigating the New Landscape

The March 2025 data reveals a market transitioning from rapid growth to a more measured pace. While the national HPI’s 0.7% decline signals ongoing price adjustments, the 12.8% sales surge and falling interest rates hint at resilience. Regional disparities will dominate investment outcomes, rewarding those who prioritize location-specific fundamentals over broad trends.

For now, the path forward is clear: investors must marry macroeconomic patience (waiting for OCR cuts to fully materialize) with micro-strategies targeting undersupplied, high-demand regions. The REINZ report’s key takeaway is inescapable—the New Zealand housing market is no longer a uniform story, but a mosaic of opportunities and challenges.

In this environment, adaptability and regional focus will define success.