Real estate industry in New Zealand - statistics & facts
Have mortgage rates reached their peak?
Housing affordability has been a key issue across New Zealand for many years, with the country having one of the highest house price-to-income ratios worldwide. While the real house price index and house price-to-income ratio have been trending downward since the fourth quarter of 2021, potential homeowners still face several obstacles to financing a property. The majority of residential mortgage lending was provided to owner-occupiers where the property was not their first home, with less lent to first-time buyers.Yet, New Zealand’s average new residential mortgage rates showed signs of stabilizing at the end of 2023. Rates started to fall across all mortgage terms throughout 2024, returning to similar levels as 2022. These lower rates could stimulate sales activity and help stabilize property values. While homeownership remains challenging, the tides may be turning as the house price-to-rent ratio continues falling, bringing into question whether buying a home over renting has become more logical for those able to secure a loan.
Is renting becoming less favorable?
With climbing the rungs of New Zealand’s property ladder out of reach, many individuals and families are stuck renting for prolonged periods. However, with recent years marked by rapid rent price rises disproportionate to income coupled with a highly competitive rental market, renting has become a less appealing prospect. The Auckland housing market has historically recorded the highest weekly rent prices across New Zealand’s regions.Industrial property stays strong
New Zealand’s commercial real estate landscape encompasses industrial, retail, office, accommodation, and mixed-use buildings. Commercial property is generally rented, making it a significant investment market in the country. While most investments are from local buyers, overseas investors also make a considerable contribution. Industrial properties saw strong demand, leading the commercial market in sales compared to other sectors. While retail spaces accounted for the second-highest commercial property sales share, growing demand for warehouses to support e-commerce operations has caused retail to lose ground to industrial. Office leasing activity was softened recently following the COVID-19-induced work-from-home boom and the adoption of hybrid working policies.Moving ahead into 2025, New Zealand’s residential property market faces a mix of challenges, including ongoing affordability constraints, and opportunities, like mortgage rate reductions. On the commercial side, market sentiment is improving, as industrial transactions remain stable, the retail sector adapts and recovers, and more return-to-office mandates from employers, notably from the New Zealand government for public service workers, present a more positive outlook for office leasing activities.