Are house prices really starting to rise? Listings exceed 30,000! This week’s key developments for property investors

1

Large numbers of withdrawn listings reflect sellers’ mixed feelings

 

The latest Real Estate Institute of New Zealand (REINZ) data shows a slight increase in the median house sale price in September, from NZ$755,000 in July to NZ$781,000 in September. Although this may appear to signal rising prices, many industry observers believe it simply reflects seasonal changes, with prices still below the same period last year. Sales volumes fell slightly in September, from 6015 homes in August to 5816 in September. Although year-on-year comparisons show little change, the overall sales trend remains flat, with no clear signs of market growth.

 

 

Meanwhile, new listings increased in September. Realestate.co.nz data shows 9276 new listings in September, up 18.7% year on year. This growth reflects sellers’ expectations of the busy pre-Christmas selling season. However, while sellers are actively listing properties, buyers remain cautious and are delaying purchase decisions.

 

Total listings are another figure to watch. By the end of September, Realestate.co.nz had more than 30,000 listings, up 27% year on year. This high inventory contrasts sharply with subdued sales, further highlighting excess supply. However, inventory could be even higher were it not for thousands of properties being withdrawn each month. Interest.co.nz estimates that more than 3000 listed properties have been withdrawn each month since April this year. Many are withdrawn because sellers’ price expectations are too high for a sale to be agreed.

 

2

Investor activity rises as the housing market maintains steady growth

 

The latest data shows first-home buyers remain dominant in the current housing market, accounting for around 26% of transactions in September. However, investors who own multiple mortgaged properties are worth watching: their activity has gradually increased over the past 4–5 months, reaching a 23% market share in September. This growth may have benefited from the restoration of 80% interest deductibility from 1 April, rising to 100% from April 2025, and lower deposit requirements since 1 July. Falling interest rates may create a more favourable environment for property investors.

 

On the other hand, although falling mortgage rates are welcome news, they also mean debt-to-income (DTI) restrictions will become more binding, particularly for investors buying existing homes. As new builds are exempt from these restrictions, investors are expected to focus more on that market, and many have already begun positioning themselves.

 

3

Construction costs remain stable

 

The latest Cordell Construction Cost Index report shows that the cost of building a standard home rose just 1.1% quarter on quarter in this year’s third quarter, compared with -1.1% in the second quarter. Annual growth was only 1.3%. This reflects continued weakness in construction, ample choice among existing homes for buyers, and a weak labour market that is keeping ordinary households cautious about property investment.

 

Although construction is currently in a downturn, falling mortgage rates could bring more demand in 2025, particularly for new builds, helping to boost developer confidence.

 

4

Inflation falls below 3%

 

 

Stats NZ reports that inflation fell to 2.2% in the second quarter of this year, returning to the 1–3% target range for the first time since early 2021. Falling import prices were the main driver, while domestic non-tradable prices still rose 4.9%, mainly because of increases in rents, council rates and insurance premiums. Although the result was expected, it will keep the Reserve Bank focused on market data, with another cut of 50 basis points anticipated on 27 November.

 

5

Bank lending activity increases

 

This week, the Reserve Bank of New Zealand will release mortgage data for September, covering home purchases, loan top-ups and switching banks. With lower deposit requirements and increased investor activity, lending has risen for several consecutive months. Incentives such as cashback offers have been particularly effective in attracting borrowers to switch banks. The September figures are expected to continue this trend.

 

More economic data will also be released this week, including the New Zealand Activity Index for September and ANZ’s October Consumer Confidence Index, which economists expect will continue to signal recent economic weakness.