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July 2025: A mid-year market check-in.

Flat for now

As we reach the halfway point of 2025, New Zealand’s housing market has been losing its earlier upward momentum. After a run of small house prices increases over the first part of the year, seasonally adjusted house prices fell 0.3% in June. The level of house prices now sits just 1.1% above its most recent low in October 2024. The overall picture is one of a market that’s holding broadly steady, but certainly not going anywhere fast.

Sales volumes have spent most of the year near their long-run average, though recently dipped below it, suggesting some renewed caution among buyers. This has come alongside wider indicators suggesting that the economic recovery has been running out of steam over recent months.

Headline inflation isn’t exactly comfortable for the Reserve Bank at 2.7% y/y, but spare capacity in the economy and soft economic activity data suggests that medium-term inflation risks are contained. ANZ Economists remain of the view that three further cuts in the Official Cash Rate (OCR) will be needed to shore up the economy and stabilise inflation around the Reserve Bank’s target midpoint.

Given this backdrop, we expect a modest increase in house prices over 2.5% over 2025. Looking ahead, we anticipate a pickup in market activity in 2026. Further reductions in the OCR are expected to lower borrowing costs, while a strengthening and broadening economic recovery should support household confidence and investment. These factors are expected to contribute to a more significant increase in house prices of 5.0% over the course of next year.

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