Brought to you by Senior Research Analyst Wayne Shum
Market momentum: A snapshot of the New Zealand property market – three months ending September 2025
Property values remained relatively subdued over winter, declining 0.8% over the past three months and 1.1% year to date. Eight of the 16 regions experienced a decrease in values this quarter, down from 10 regions in the previous quarter.
Notably, 10 of the 16 regions recorded growth since the end of August, suggesting the potential for a spring recovery. At a national level, the Valocity Value increased by 0.1% over the past month, reflecting the early effects of recent interest rate cuts.
Figure 1: Valocity Value – New Zealand
The Valocity Value Index shows that New Zealand’s housing market softened throughout 2025, reaching a low of $956,000 in August. A slight increase to $957,000 in September indicates early signs of stabilisation, although it is still too early to confirm a sustained rebound. This improvement reflects the impact of lower mortgage rates and improved housing affordability.
Figure 2: Valocity Value – New Zealand – 2025
Following the August OCR cut, mortgage rates continued to ease in September. Forecasts suggest the OCR could reach 2.5% by the end of 2025, with some lenders already offering one-year fixed rates as low as 4.5%. Weaker-than-expected GDP data in September has also fuelled speculation of a larger 0.5% cut in October, with some commentators projecting the OCR could fall to around 2% by early 2026. While lower rates are gradually improving affordability, the impact has been slow to filter through.
The RBNZ has appointed a new Governor, who has emphasised price stability and transparency as her key priorities. She will take office on December 1, with her first Monetary Policy Statement scheduled for February 18, 2026. Markets are expected to closely monitor her early communications, as any shift in tone or policy direction could influence interest rate expectations and broader financial conditions.
Net migration remains subdued, restraining housing demand, though some recovery is evident in select segments. The government has announced changes to foreign buyer restrictions, allowing Active Investor Plus Visa holders to purchase or build a home valued at $5 million or more. Proposed reforms to the skilled migrant residency pathway are also expected to deliver longer-term economic benefits.
The unemployment rate has risen to 5.2%. However, the year-on-year growth in job listings suggests that it may have already peaked.
Both house prices and mortgage rates have eased, improving affordability, yet many prospective buyers remain cautious, awaiting further OCR reductions expected in late 2025 and early 2026. As mortgage rates reach the low 4% range, the Debt-to-Income ratio will continue to constrain some borrowers. This suggests that affordability will improve without triggering the sharp house price increases seen in 2020-2021.
For existing borrowers, the benefits of lower rates have yet to fully materialise, with many still locked into higher-rate loans from 2022–2024. Meanwhile, investor activity has increased, accounting for a larger share of new mortgage registrations. Supported by improved cash flow from lower rates, restored full mortgage interest deductibility, and expectations of capital appreciation in 2026, investor confidence appears to be rising.
Figure 3: Valocity Value Index and Benchmark Rates
Figure 4: Valocity Value Movement – Year on Year Comparison
The national median sale price declined to $735,000, reflecting a shift in market activity toward lower price segments compared with the peak levels of 2021 and 2022. This trend highlights buyers’ caution in taking on larger mortgages, in contrast to the higher borrowing appetite observed during the low-rate period of 2021.
Figure 5: Median Sales Price (Settled Sales Only)
Low net migration has continued to weigh on the housing market, reducing rental and purchasing demand. This is evident in softer market rents and longer vacancy periods across some areas.
Figure 6: Annualised Net migration (Statistics NZ)
Construction
Annualised building consents for new homes decreased from the 2024 volume, and the mix shifted toward standalone houses. An oversupply of townhouses, particularly in urban centres, has helped restrain price growth.
Figure 7: Composition of New Homes Consented – Annualised (Statistics NZ)
Valocity values
On the horizon
- Monetary Policy Review and OCR – 8th October 2025
- Release of Consumers Price Index (CPI) – 20th October 2025
For further information, or if you would like to understand more about New Zealand housing market insights please contact [email protected].