What happens is important because so much of many New Zealanders' wealth is tied up in their property.
When prices rise, homeowners are more likely to feel good about their circumstances.
They are more likely to spend and stimulate the economy. Conversely, flat or falling prices dampen consumption.
Such is the importance of housing, and the many tens of billions of dollars invested, that New Zealand has been described as a housing market with an economy attached.
While this portrayal is hyperbolic, there is a solid seam of truth. Much of the country's apparent affluence is built on hyped-up housing.
It is prosperity on foundations of sand. It is not based on productivity and exports but on debt.
New Zealanders largely owe their mortgages through the big four Australian-owned banks.
This huge debt creates national vulnerability, and the interest payments are a heavy drain contributing to this country's dangerously large current account deficit.
This is regularly several percent of GDP. New Zealand spends a lot more than it earns.
Loose monetary conditions and Government spending post-COVID supercharged house prices.
The short-term sugar hit was followed by easing levels around most of the country.
The relatively orderly retreat was much better than a collapse.
That would have crashed the economy. Mortgagee sales at scale would have created a spiral difficult to reverse.
Prices, nevertheless, remain too elevated in most places.
Even as interest rates fall, housing affordability is still a nightmare.
Homeownership levels continue to slip.
Social coherence and well-being are enhanced when more people own their homes. More families have a concrete stake in society.
Usually, two stable and substantial incomes are required to secure the confidence, ability and the bank's backing to take on a large mortgage. Saving a sufficient deposit is the first massive hurdle.
Prices are down 18% from the post-Covid peak but still above early 2020 levels.
Even then, New Zealand was considered to have expensive and largely unaffordable housing in many centres, especially Auckland and Queenstown.
It will also be important that policies on land availability, housing density and building costs all have impacts.
New house and apartment prices must be contained to help subdue secondhand house values.
Against the various pressures, what are the experts saying?
The chief economist at property insights firm CoreLogic predicts rises of 5% for 2025 after a "soggy" 2024, when prices fell nationwide 3.9%.
Calculate for inflation and the real fall was significantly higher.
Wellington (6.5%) and Auckland (6.2%) fell markedly. Dunedin was up 1% (a fall in real terms once inflation is factored) and Christchurch was up 0.3%. The Dunedin medium price was now $607,327, well down on the peak.
All districts from Waitaki south showed small annual increases except for the Southland District which experienced a small fall. Queenstown Lakes has the highest national median dwelling value at $1,433,921.
Economists expect lower interest rates to become more of a force in 2025. Investor interest in rental properties might also be returning.
Counteracting these are job losses and job insecurity prompting caution, as well as the collapse in immigration numbers lessening demand.
China's economic issues could dent New Zealand's prospects. And incoming United States president Donald Trump's debt and tariff policies could reignite inflation and therefore boost interest rates.
Westpac's chief economist plumbs for an 8% house price rise this year, mainly on the back of the interest rate falls. ANZ's economists go for 6%.
ASB bank's economic team is tipping 2025 prices to jump by as much as 10%. Kiwibank economists estimate a gentler rise of 5%-7%.
But do not bet your house on these remarkably consistent expectations. For a start, it is sometimes argued banks have a vested interest that encourages more positive predictions.
After bumps in 2023 of a few percent, all the banks forecast price increases in 2024, some as high as 7%. They were wrong. They could be again.
