PHOTO: With global tensions flaring and oil prices skyrocketing, Kiwi economists are slashing forecasts. FILE
War, Oil, and Economic Warnings: Kiwi Housing Market Takes a Hit
The latest blow to New Zealand’s already fragile housing market? America’s deepening involvement in the Israel-Iran war.
With global tensions flaring and oil prices skyrocketing, Kiwi economists are slashing forecasts, sounding the alarm that rising uncertainty is rattling both buyers and sellers—and it’s far from over.
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House Price Forecasts Slashed Amid Chaos
BNZ’s chief economist Mike Jones has revised the bank’s housing market forecast down from 5–7% to just 2–4%. “Global events are shaking confidence, and that’s bleeding into New Zealand’s market,” he said.
Jones pointed to an economic recovery that had just started gaining momentum—until a series of unexpected shocks derailed sentiment.
“We’re supposedly in recovery, but the global situation is changing so fast, it’s become almost impossible to predict anything with confidence,” Jones admitted.
Petrol Pain: The ‘Invisible Tax’ on Households
One of the key stressors? Soaring petrol prices. As oil costs surge, household budgets are getting squeezed—reducing discretionary spending and delaying big decisions like buying or selling a home.
KiwiBank’s chief economist Jarrod Kerr described it bluntly: “Petrol prices are like an extra tax on already stretched families. It’s not just an economic hit—it’s a psychological one too.”
Mortgage Relief? Don’t Hold Your Breath
Kerr and others fear the Reserve Bank may drag its heels instead of cutting the Official Cash Rate (OCR) to support the housing market.
“They’re playing wait-and-see, but frankly, we need action now. Every delay stalls the recovery,” Kerr warned.
What’s Holding the Market Back?
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Confidence shocks from global conflict
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Soaring fuel and grocery bills reducing household spending
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Falling KiwiSaver balances shaking financial security
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Muted mortgage rate drops doing little to reignite buyer interest
The ‘Best-Case’ No One Believes In
A best-case scenario, economists say, would involve a Middle East ceasefire, resolution in Ukraine, and Donald Trump pulling back on tariffs. But that’s a long shot.
“Instead, we’re bracing for slow global growth and lingering uncertainty,” said Kerr. “That just stretches out the recovery even further.”
Reserve Bank: Watching, Worrying, Waiting
Westpac’s Kelly Eckhold echoed the same sentiment: the Reserve Bank looks likely to pause in July, delaying any meaningful rate relief. And with inflation unlikely to peak before October, that leaves the housing market in limbo.
“Uncertainty might be temporary, but its impact on growth and inflation expectations is very real,” Eckhold said.
What It All Means for Kiwis
With buyer and seller confidence crumbling, price expectations tumbling, and cost-of-living pressures mounting, the once-promising housing recovery is on shaky ground.
Economists agree: confidence is the missing piece. Until global tensions ease and fuel prices stabilise, the housing market will remain subdued—and New Zealand households will keep feeling the squeeze.
🔑 KEY TAKEAWAYS:
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US involvement in Middle East conflict is spooking NZ markets
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BNZ cuts forecast to 2–4% house price growth for 2025
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Petrol prices and cost-of-living pressures eroding confidence
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Reserve Bank is expected to delay OCR cuts, leaving buyers in limbo
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Economists urge immediate action to avoid prolonged stagnation
📉 “We’re crawling out of recession—but the crawl just got slower,” said Kerr. Until global conditions stabilise, Kiwi families may be stuck on the sidelines of the housing market—waiting, hoping, and tightening their belts.