Biggest trends

Wider residential market starting to recover

Independent forecasters are typically predicting house prices will rise over the next two years. Early signs of recovery are shown through stronger sales volumes, although prices remain flat. In the short term, price growth has been held back by the large supply of homes currently on the market for sale.

Interest rates the one to watch

Lower interest rates are boosting confidence in the market and are likely to be the most important driver of the market in the short-term. At a bigger picture level, risks around tariffs and global trade have added uncertainty to the market.

Law changes support investors

Policies put in place by the government, such as restoring mortgage interest deductibility for rentals and wider termination rights for landlords, will increase demand from investors in the medium term.

Outlook for the next 12 months

Rent growth slower due to softening migration

gains continue to ease, with the trend particularly noticeable in the Auckland region, where new arrivals typically settle first. This coincides with a period of rising vacancy rates and a clear softening in rental growth.

Returns bolstered by lower interest rates and law changes

Lower funding costs will mean improved equity returns for residential investors. Along with the policy changes, this is likely to lead to more acquisition activity by investors.

Government and developers align on next phase

Experienced property developers are anticipating the market’s recovery and preparing for the next cycle. The government has also been introducing pro-development policies to help streamline the development process and ultimately boost the supply of housing.