New Zealand’s housing market is showing signs of recovery, with exciting opportunities on the horizon.

The sector’s boom comes with unique challenges, but it’s a promising area for prospective home buyers or sellers looking to make moves in the market. The property market in New Zealand is full of exciting opportunities for aspiring homeowners. We explore the various incentives available to help you navigate the path to property ownership, from government initiatives to market trends that could benefit buyers. Whether you’re a first-time homebuyer or looking to expand your property portfolio, there’s never been a better time to make your move.

Property Market Predictions for 2025

2025 promises an optimistic look into New Zealand’s real estate sector. Here are some reasons why:

• A drop in interest and mortgage rates: Interest rates could fall in 2025, which would help many potential buyers purchase their property. The Official Cash Rate (OCR) fell by 50 basis points to 4.25% in November 2024, and another 50 basis points decrease is likely in February 2025.  The OCR’s decline will trigger a drop in mortgage rates, benefiting both new buyers’ and existing borrowers’ repayment schedules. Pairing the reduction in interest rates with increased property value could make houses more affordable in 2025.
• Availability of homes may decrease, improving value: New Zealand saw fewer housing project approvals in 2024, with new building consent going down 20.1% in the 12 months leading to August 2024 compared to the same period in 2023. Experts believe there will be a scarcity of construction in 2025. When the housing market has limited properties for sale, the existing ones increase in value and vice versa. For example, home prices dropped 4.3% in the U.S. city of San Antonio because of increased new builds in the area. While home prices may rise as a result, their value is likely to do the same. The improved interest and mortgage rates mean savvy home buyers and sellers may see it as the perfect time to make a move. An exception to this trend is Auckland, where there will be more new townhouse projects available for purchase. Experts say new builds comprise 25% of listings in the area.

A Variety of Government Incentives and Funds

Many incentives could benefit aspiring property owners in New Zealand in 2025. Some examples include:

• The KiwiSaver First Home Withdrawal: This scheme allows you to withdraw your KiwiSaver to fund your home-buying expenditure. It works for both first-time buyers and existing homeowners, but the house purchased must only be used for residence and not for investment.
• Progressive Home Ownership Fund: Under the Ministry of Housing and Urban Development, this incentive facilitates home ownership via various channels like rent-to-buy, shared equity and leasehold. The $400 million fund offers funding through interest-free loans.
• First Home Loan: This incentive reduces the deposit for houses to 5% from the typical required minimum of 20%. The reduction could assist first-time homebuyers on a tighter budget.

Challenges to a Flourishing Property Market in 2025

Increasing job insecurity issues and the rising cost of living may deter renters from buying a home in 2025. For many, this would mean renting longer until housing prices stabilize. Even then, they spend an average of 30% of their income on rent, which is often comparable to the cost of a monthly mortgage.

Renters considering entering the property ladder should consider the cost of rent versus home ownership and factor in the lower interest rates against the rising cost of property to make a decision that works best for their unique situation.

The Property Market for Sellers in 2025

Experts anticipate house prices rising by 7% in 2025 due to increased demand following the drop in interest rates. Pairing this with the decrease in mortgage rates and fewer houses on the market in 2025, homeowners can expect an opportune and lucrative selling arena.

Property owners can further enhance their selling chances by investing in proper maintenance for their house, pricing the home competitively, indulging in some renovation and upgrades and opting for energy efficiency efforts to entice more buyers.

2025's Property Market to Offer a Level Playing Field to Buyers and Sellers

New Zealand’s real estate sector will likely rise after encountering a challenging last few years. If you’re ready to sell your home or buy a new one, 2025 could be your year.