Residential Market

The earlier economic pressures of persistent high inflation and elevated interest rates have eased in recent times. However, uncertainty continues to weigh on the property market. Gross Domestic Product (GDP) experienced a contraction of 1.1% in the September 2024 quarter, followed by a rebound with a 0.7% increase in the December 2024 quarter. Despite this quarterly recovery, the annual GDP for the year ended December 2024 declined by 0.5%. Inflation has moderated and currently sits at 2.2%, within the Reserve Bank's 1%–3% target band, and is expected to stabilise around the mid-point. Notably, the Reserve Bank has reduced the Official Cash Rate (OCR) by 0.25% to 3.50%, with indications of potential further cuts later in 2025. This may provide some stimulus to the presently subdued residential market.

The past few months have seen a comparatively high volume of properties on the market without a corresponding volume in prospective purchasers.

Most sectors of the property market could be described as being in favour of purchasers, reflecting the reasonably high volume of properties for sale and only limited interest from the buyers. Value levels are perhaps sliding sideways and, in some instances, have the potential to decline.

Current drivers of the housing market:

Interest rates cut 200bps since August 2024, with further easing likely.
Debt-to-income caps incoming; lending restrictions changing mid-2025.
Buyer reluctance; affordability stretched despite lower rates.
Listings exceed 30,000 nationally, boosting buyer choice.
Construction costs remain high but stabilising.
Net migration slows after 2023 peak of 139,000 to 30,600 (Stats NZ January 2025).
122,800 New Zealanders left the country in 2024, mainly to Australia.
Business confidence low; GDP grew 0.7% Q4 2024 post-recession.
Unemployment rising - 5.1% as of March 2025, job security a growing concern.
34,062 new dwellings were consented throughout New Zealand in the year to March 2025, a 3.3% decline from the previous year. Tauranga City residential consents have nearly halved from the peak of 2021.
Economy weak but technically out of recession.

Property values appear to have stabilised after a period of falling values, though significant upward movement is not expected in the medium term.