Navigating Stability: Insights into New Zealand's Property Landscape

ON THE MARKET – May 2025 Edition 

The New Zealand property market is recovering in 2025, with average values up 0.4%, sales increasing 3.4%, and long-term returns surpassing 4% term deposits across key areas like Auckland, Queenstown, and Papamoa.

At Staircase we have been providing smart property investment solutions for over 23 years and have remained focused primarily on three target markets being Auckland, Queenstown, and Tauranga. 

We believed these 3 locations would offer superior capital growth over time and they have resoundingly proven that to be true. This strategy has rewarded our long-term clients handsomely as revealed in the enclosed analysis comparing capital growth rates in these locations versus having simply invested funds in a term deposit.  

As we progress through 2025, the New Zealand property market exhibits signs of resilience and cautious optimism. The combination of key indicators including falling mortgage interest rates, rising sales volumes, improving migration trends, stabilising employment, and recovering house prices signals the beginning of a new property cycle, one that rewards those who move decisively. 

Investment growth comparison: property vs. term deposits (2000-2025) 

Property investments across key New Zealand locations have demonstrated significant long-term growth, consistently outperforming traditional savings options like term deposits.  

This graph highlights the remarkable performance of property markets in our three chosen investment locations, Auckland, Queenstown-Lakes, and Papamoa, over the past 25 years.

Key Insights: 

• Queenstown Leads the Pack: Properties in Queenstown-Lakes have shown the highest capital growth, benefiting from strong tourism demand, lifestyle appeal, and international interest. 

• Auckland’s Urban Advantage: Auckland's property market follows closely, driven by high urban demand, population growth, and ongoing infrastructure investment. 

• Papamoa’s Rising Star: Papamoa has demonstrated substantial growth, reflecting strong demand from lifestyle-oriented buyers and retirees attracted to its coastal location. 

• National Growth: The NZ national property market shows moderate, consistent long-term gains, reflecting the broader stability of New Zealand's housing market. 

• Term Deposits Lag: In contrast, term deposits, while stable, have provided significantly lower returns, highlighting the wealth-building potential of property over the long term. 

The graph below illustrates the difference between investing $100,000 in a term deposit at a 4% annual return versus using the same $100,000 as a 20% deposit on a $500,000 property (reflecting the median house price in 2000). 

This showcases how leveraging bank capital through property investment can significantly amplify returns over time compared to the steady but lower growth of term deposits. 

What are the signs that the property market Is recovering? 

The property market is showing encouraging signs of recovery. The nationwide average property value increased by 0.4% to $970,000, marking the fifth consecutive month of growth. Sales volumes have also seen an uptick, rising by 3.4% annually. Regional performances vary, with areas like Tasman leading growth at 2.3%, while others remain stable. 

Additionally, forecasts suggest a modest rise in house prices, with expectations of a 5% increase in 2025 as interest rates continue to fall. This trend indicates a gradual return of confidence among buyers and investors, as also reflected in our most recent NZ property market update, which highlights steady growth across key regions.

How does the unemployment rate affect property growth?

The unemployment rate remained unchanged at 5.1% in the March 2025 quarter, consistent with the December 2024 figures according to this study. This stability suggests that while the labour market faces challenges, it is not deteriorating further. 

The rate is slightly better than market expectations, which anticipated a rise to 5.3%. This steadiness provides a level of confidence for both consumers and investors, indicating a degree of resilience in the job market. 

Are New Zealand mortgage rates expected to drop?

In a move to further stimulate economic activity, the Reserve Bank of New Zealand (RBNZ) is expected to further reduce the OCR again in two weeks at the next OCR announcement date. We expect this reduction will flow into even lower mortgage rates. 

 Competitive fixed mortgage rates may improve but currently as follows: 

• 6-month fixed: 5.49% 

• 1-year fixed : 4.99% 

• 18-month fixed: 4.95% 

• 2-year fixed: 4.99% 

Should you invest in NZ property in 2025?

As we move further into 2025, the New Zealand property market stands at a critical juncture. Despite broader economic challenges, the foundational strengths of this market, stable employment, favourable mortgage rates, and a recovering property sector, provide a unique window of opportunity for investors. 

Savvy investors understand that true wealth creation often occurs during times of market transition. Now is the moment to act, leveraging the current environment to secure high-growth assets, maximise yield, and position yourself for long-term capital gains. 

If you're a first-time investor aiming to enter the market or a seasoned property owner planning to grow your portfolio, this period presents a compelling case for proactive investment.

For personalised advice and strategic guidance on how to capitalize on these emerging trends, reach out to our expert team today. Let’s make 2025 a year of smart, forward-looking investments. 

Stay informed, stay confident, and let your investments work for you. 

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