New Zealand’s housing market showed a dip in August 2025, with home prices falling by 1.3% month-on-month and 0.5% compared to the same period last year. Despite aggressive interest rate cuts by the Reserve Bank of New Zealand (RBNZ) since mid-2024, aimed at stimulating the economy, buyer sentiment continues to be cautious.
The number of home sales also decreased by 4.5% compared to July, although there was a slight 0.6% increase year-on-year. The Real Estate Institute of New Zealand (REINZ) acknowledged that while the RBNZ’s monetary easing should ideally boost demand, many potential buyers are still hesitant due to economic uncertainties and ongoing affordability issues.
REINZ CEO Lizzy Ryley expressed cautious optimism, suggesting that the market may see a rebound in the coming months as the effects of rate cuts take hold. However, the outlook remains fragile, with analysts predicting only modest growth in home prices for the rest of 2025, down from previous projections.
A recent Reuters poll has forecasted a 1.3% rise in home prices for 2025, a significant revision from the earlier estimate of 3.8%. This revised outlook reflects the ongoing challenges within the economy, such as rising unemployment and low consumer confidence, which have dampened the positive effects of monetary easing. Despite a 20% reduction in mortgage rates from last year’s highs, housing affordability remains a key concern, with homes still priced at roughly six times the average household income.
In conclusion, while the interest rate cuts have provided some relief, New Zealand’s housing market remains subdued, and the recovery appears to be gradual. The pace of recovery will depend largely on improvements in economic conditions and consumer confidence.
