Monthly Property Insights

A few weeks ago, casual observers may have noticed the GDP data release for the first quarter of the year – which showed a robust 0.8% increase – and concluded that everything is right in the world. However, the reality is somewhat more subdued, both in the economy and housing market.

Don’t forget that Q1 was a long time ago

The first point to note is that we’re already now into the third quarter of the year, and after the solid GDP result for January-March, most indicators for April-June were patchy, or worse. For example, the services sector (such as accommodation and hospitality) continues to struggle along, and manufacturing remains variable too. Some overall ‘real time’ indicators (such as the Reserve Bank’s Kiwi-GDP) suggest that the economy may have flat-lined in Q2, or perhaps even contracted slightly. In this environment, firms aren’t hiring much, and the unemployment rate could rise further yet.

Of course, it’s not all doom and gloom, with most parts of the wider agricultural sector faring pretty well at present. That will be pumping a bit of cash into the rural services towns around many of our provinces, supporting businesses and propping up the housing market a bit too.

Keeping an eye on inflation

That said, farmers don’t have everything in their favour either, with the US tariffs of course creating additional uncertainty. Longer term, with consumers in the US having to pay more for our exports (their imports) than otherwise might have been the case, tariffs will likely be a net-negative for our GDP. But in the near term, the bigger focus right now is probably on the inflationary effects, especially when compounded by other global problems at present, such as Ukraine, Israel/Iran.

Those extra inflationary concerns come at a time when there were already hints of prices starting to rise again at a slightly higher pace domestically, with food still up strongly, alongside household energy prices, and council rates. The Reserve Bank will be keeping a very close eye on these issues, and may have to postpone any further OCR cuts, even though the economy remains subdued.

More housing activity, but flat-ish prices

Turning to the property market, it’s ‘déjà vu all over again’. It’s true that mortgage lending activity and house sales volumes are rising fairly consistently in terms of percentage growth rates, but after starting from such a low base, they’ve only recently returned to a ‘normal’ level. And of course, a lot of that mortgage activity is ‘churn’, in terms of existing borrowers repricing to a new fixed rate or going from f loating to fixed. Bank switching remains elevated at present too.

In the meantime, the stock of available listings on the market remains elevated (albeit showing early hints of a gradual downwards trend) and this is keeping pricing power in buyers’ hands. The Cotality Home Value Index showed that national values only crept up by 0.2% in June, offsetting two small falls in April and May. Over the first six months of 2025, values have only risen by 0.6%. It remains the ‘year of conflicting forces’ – lower mortgage rates providing support for the market, but other factors such as the weak labour market and credit restraints (e.g. lurking DTIs) as an offset. At this stage, a modest increase in national values of 2-3% this calendar year looks the most likely. That’s perhaps not going to please property owners/sellers. But it’s obviously great for buyers.