NZ Housing Market in Transition – Key Trends for Property Investors
- Staircase Financial
- 5 days ago
- 3 min read
ON THE MARKET – June 2025 Edition
Cooling Construction Pipeline: Fewer Homes Coming Soon
After years of record-breaking building activity, New Zealand’s residential construction sector is clearly shifting gears. In April 2025, just 2,418 new dwellings were consented nationwide. That’s a 17% decline compared to April 2024. Over the past 12 months, consents have totaled around 33,500, down from over 37,000 the year before.
This marks a definitive slowdown in the housing supply pipeline.
Several factors are driving the retreat. Elevated construction costs, labour shortages, and tighter funding conditions have all made developers more cautious. Many projects are being postponed or scaled down as developers wait for stronger demand or lower borrowing costs.
For first-time investors, this shift has two key implications.
There is still a surplus of near completed and just finished properties entering the market. These opportunities can offer good value for investors who do their due diligence.
The reduced flow of new supply could sow the seeds for a tighter housing market in the medium term. Once existing stock is absorbed and population growth picks up again, limited future supply may place upward pressure on rents and values especially in high demand areas.
For savvy investors, this period could represent a rare window to secure well located property at reasonable prices, ahead of potential supply constraints.
Investors Return – Quietly but Confidently
Mum and dad investors are steadily re-entering the housing market after stepping back during the 2022–23 downturn. CoreLogic’s latest buyer classification data shows investors accounted for 23% of residential purchases in early 2025, up from 20% at the cycle low. This quiet resurgence signals renewed confidence among property buyers with long-term outlooks.
The turnaround has been largely driven by improved cashflow. With the Reserve Bank trimming the Official Cash Rate and banks following suit, mortgage rates have dropped notably from their 2023 peaks. For many investors, the “top-up” required when rent doesn’t fully cover the mortgage has been nearly halved. A $400 weekly shortfall may now be closer to $200, making buy and hold strategies more palatable.
In addition, the relaxation of LVR rules in mid 2024 has also helped, with some banks now able to approve investor loans with a 30% deposit (up from the prior 35% requirement).
Know the Rules: Compliance and Tenancy Law Updates
With opportunity comes responsibility and 2025 brings significant regulatory milestones that first-time landlords must be aware of. Chief among these is the final Healthy Homes Standards compliance deadline. From 1 July 2025, all residential rental properties must fully comply with government mandated standards for heating, insulation, ventilation, moisture barriers, and draught stopping.
While many newer properties already meet these benchmarks, older homes, especially those built before 2000, may require substantial upgrades. Common retrofit tasks include installing a compliant heat pump, topping up ceiling insulation, or sealing draughts. Investors purchasing older stock should factor compliance costs into their upfront or year-one investment calculations. Failure to comply can result in fines up to $7,200 per breach and may also result in potential costly tenancy disputes.
In parallel, changes to the Residential Tenancies Act have subtly shifted the balance back toward landlords. One key change reintroduces the ability to end fixed term tenancies at expiry without needing to convert them into periodic agreements. This provides landlords with greater flexibility for selling, renovating, or re-letting the property on their own terms.
Another update relates to pets. Landlords can no longer reject pet requests outright; they must consider them fairly, though refusal is allowed with valid justification. This shift underscores the need for clarity in tenancy agreements and a proactive, professional approach to property management.
In Summary
New Zealand’s housing market is entering a phase of recalibration. The building slowdown is sowing the seeds for future undersupply. Investors, quietly gaining ground, are capitalising on tax reforms, better cashflow, and regulatory tailwinds.
For investors, the message is clear: opportunities exist, but success will come to those who are informed, compliant, and strategic. With the right guidance, 2025 could be your time to enter the market and lay the foundations for long-term growth.
Contact the team at Staircase to book a free consultation and discover how we can help you build a successful property portfolio today.
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