PHOTO: As inflation edges up and mortgage rates remain elevated, New Zealand’s property market is navigating a complex landscape. FILE
Here’s what you need to know:
📈 1. Inflation Rises to 2.5% – Still Within Target
New Zealand’s annual inflation rate climbed to 2.5% in Q1 2025, up from 2.2% in the previous quarter. This increase, the highest since June 2024, was primarily driven by rising rents and local authority rates. Despite this uptick, inflation remains within the Reserve Bank’s 1–3% target band, suggesting that while caution is warranted, immediate drastic measures may not be necessary.
🏠 2. House Prices Show Modest Growth
The QV House Price Index indicates a national average home value of $903,928 in Q1 2025, marking a 0.2% increase from the previous quarter but a 2.3% decrease year-on-year. This suggests a stabilizing market, with prices gradually adjusting after previous declines. QV – Nationwide Property Valuations
💰 3. Mortgage Rates Remain Elevated
Mortgage interest rates have remained high, with an average rate of 7.91% in Q4 2024. While this is a slight decrease from earlier in the year, rates are still significantly higher than in previous years, impacting affordability for many buyers.
🧳 4. Net Migration Trends Upward
Net migration into New Zealand reached approximately 8,800 in March 2025, the highest monthly figure since September 2023. This increase is attributed to a rise in non-citizen arrivals and a slight decrease in Kiwi departures, indicating a potential rebound in population growth.
📊 5. GDP Growth Shows Positive Signs
Forecasts for New Zealand’s GDP growth in Q1 2025 vary, with estimates ranging from 0.3% to 0.6%. These figures suggest a modest economic recovery, which could positively influence the housing market and broader economy in the coming months.
🔍 Infometric: Key Housing Market Indicators
| Indicator | Q1 2025 Value | Trend |
|---|---|---|
| Inflation Rate | 2.5% | ↑ from 2.2% |
| Average Home Value | $903,928 | ↑ 0.2% QoQ |
| Mortgage Interest Rate (Avg) | 7.91% (Q4 2024) | ↓ from 8.50% (Q3) |
| Net Migration (March 2025) | ~8,800 | ↑ Highest since Sep 2023 |
| GDP Growth Forecast | 0.3% – 0.6% | ↑ Modest growth |
🔑 Takeaway
While inflation has seen a slight increase, it remains within manageable levels. The housing market shows signs of stabilization, and economic indicators like GDP growth and net migration are trending positively. However, high mortgage rates continue to pose challenges for affordability. Prospective buyers and investors should stay informed and consider these factors in their decision-making processes.