House prices peaked in Wellington in 2021, with the average value up 60% on three years prior. By 2024 values had dropped on average by 24.4%.
Davidson said the downward trend appears to have ended, but the city’s yet to see any real uptick.
“Te Whanganui-a-Tara Wellington’s previous sharp downturn in property values seems to have come to an end, no doubt reflecting the influence of lower mortgage rates.
“But values are yet to show any clear upwards trend, and alongside high levels of listings, the uncertainty around public sector employment is likely to remain a restraining factor”, Davidson said.
He said while not everyone in the market would be directly impacted by the Government’s cost savings, it has contributed to feelings of a lack of job security across the public and private sectors.
Davidson said the capital’s “subdued mood”, fuelled by job cuts as well as hospitality and retail closures, feeds into people not wanting to make large purchases. He said people pull away from the housing market, decreasing demand.
“Yes, mortgage rates are down, and that’s kind of supporting things, but at the moment that influence is being dampened or masked by all the other things. Weak labour market, weak economy, confidence levels down.”
Recruiters warned of tough year
The figures come after an earlier warning from public sector recruiters that 2025 would be another challenging year for those in the sector.
Speaking to the Herald in February, Robert Walters senior director Bridget Clarke said the public sector was their biggest client and budgets were expected to remain tight.
“There’s likely a need for further cost reduction, and that’s all going to have an impact on recruitment and the ability to hire. So we’re in for another tough year.”
Job cuts continued this year ahead of May’s budget, which saw billions of dollars in savings found from 116 initiatives.
Clarke said desperate job seekers should be prepared to move elsewhere in New Zealand or overseas.
The Robert Walters 2025 salary survey showed New Zealand was losing more talent to Australia, with 42% of people planning to relocate opting to go across the ditch. For Australians, only 2% would consider moving here.
Recent Stats NZ migration data showed the annual net migration rate has fallen to 21,300 – the lowest level of migration gain since January 2014, outside of border closures in the Covid era.
The most recent Census showed Wellington was the only major city in New Zealand with a shrinking population, losing 48 people between 2018 and 2023.
Wellington ‘wounded’ from cuts – PSA
Public Service Association national secretary Fleur Fitzsimons said the impact on house values is not surprising, and represents just another example of how job cuts have “damaged” the city.
Fitzsimons said she’s personally heard from public servants who say insecurity from job cuts in the sector has impacted their life decisions like buying a house or having children.
“Public servants are nervous about their own financial situation when the government’s turned so many lives upside down, and that means it’s hard for them to make important life decisions like buying a home or moving house”, Fitzsimons said.
She said other Government moves, like changes to personal grievance rules to prevent those earning more than $180,000 from claiming unjustified dismissal, would lead to further uncertainty across the economy and potentially impact the housing market further.
In a statement, Public Service Minister Judith Collins said the public sector had gone through a period of adjustment after living beyond its means for a number of years.
“In the six years from 2017 to 2023, the number of public servants in the core public service (ministries, departments & departmental agencies) grew 34 percent, to 63,117.
“We simply do not have sufficient taxpayers or economic growth to support that level of public spending.
“Taxpayers pay our wages, and it is the NZ taxpayers we serve. They want to know we are spending their money in ways that are timely and cost-effective.”
Collins said after a tough few years New Zealand’s economy is starting to recover, thanks to her government’s “careful management”.
“The latest figures show our economy grew by 0.8% for the first quarter of 2025. Our Government is focused on continuing to grow the economy to help Kiwis get ahead”, Collins said.
Ethan Manera is a New Zealand Herald journalist based in Wellington. He joined NZME in 2023 as a broadcast journalist with Newstalk ZB and is interested in local issues, politics, and property in the capital. Ethan can be emailed at ethan.manera@nzme.co.nz.