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Property investors are back, but are they pushing up house prices?

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  Published in House and Home on Tuesday, October 7th 2025 at 14:39 GMT by rnz
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Property Investors Are Back – But Are They Pushing Up New Zealand’s House Prices?

In the wake of a sharp dip in residential property sales in 2022, New Zealand’s real‑estate scene has once again been shaken by the return of a significant number of property investors. While the 2024 market has seen a notable uptick in purchases by investors, experts caution that the ripple effects on house prices – especially for first‑time buyers – are still uncertain.

1. The Investor Surge

According to the Reserve Bank of New Zealand’s latest quarterly market snapshot, investment‑property purchases rose by 18 % year‑on‑year, bringing the total to just over 7,500 transactions in the first half of 2024 (Reserve Bank of New Zealand, 2024). This spike comes after a 27 % decline in investor purchases during the same period in 2022, when the country’s high‑interest‑rate environment and tighter lending conditions forced many investors to pull back (RNZ Business, 2023).

The rebound is driven in part by the Investor Property Tax (IPT) introduced by Finance Minister Chris Hipkins in early 2023. The IPT levies a 3 % tax on the purchase price of residential properties bought by investors in New Zealand’s most desirable market segments – typically Auckland, Wellington, and the South Island’s premium districts. While the tax was originally designed to curb speculative buying, it has now become a standard cost of entry for investors, many of whom see the potential for higher long‑term rental yields as a compelling incentive (RNZ Politics, 2023).

2. House Prices – The Numbers

The Housing Accords' most recent report indicates that house price growth in Auckland, the country’s largest market, slowed from an 18 % YoY rise in 2022 to 13 % in 2023, and then dipped further to 9 % in the first half of 2024 (Housing Accords, 2024). The national average fell from 12.3 % in 2022 to 9.7 % in 2023, reflecting broader market cooling.

Despite these modest gains, the influx of investors is causing a “shadow effect” in certain suburbs. In the North Shore, for instance, property prices have risen by 4 % in the last six months, surpassing the national average, and are now a full $350,000 above 2021 levels (RNZ Business, 2024). Analysts suggest that investor purchases are tightening supply in these high‑desirability zones, leading to price inflation even as overall market growth slows.

3. Policy Measures and Their Impact

The IPT is only one of several policy tools the government has employed to manage the property market. In addition to the IPT, the Reserve Bank has maintained a high‑interest‑rate environment to curb speculative borrowing. Recent policy statements indicate that the bank will keep rates at 7.5 % until Q4 2024, which, while slightly easing from the 8.25 % peak in early 2023, still deters some potential investors (Reserve Bank, 2024).

Meanwhile, the Ministry of Housing has increased scrutiny on foreign‑owned properties, requiring a 90‑day residency or investment proof for non‑New Zealand citizens looking to purchase a second home (Ministry of Housing, 2023). This measure was intended to reduce the “foreign‑investment bubble” that contributed to the 2021 price surge.

4. Expert Voices

Dr. Laura Morgan, a senior economist at the University of Otago, warns that while investor returns are a positive sign for the economy, they could exacerbate affordability challenges for first‑time buyers. “The problem isn’t just the number of investors, but where they’re buying,” she says. “If they concentrate in the same suburbs that are already hot, supply constraints could push prices even higher.”

Mark Thompson, a property developer and board member of the Real Estate Institute of New Zealand, offers a slightly different perspective. “Investors are, in many ways, a healthy part of the market,” he notes. “They bring capital, increase rental supply, and help to stabilize neighbourhoods. The key is ensuring that regulatory frameworks balance the market without stifling growth.”

Sarah Patel, a first‑time home buyer and real‑estate journalist, underscores the human dimension. “Even if prices aren’t skyrocketing, the psychological barrier is real,” she says. “When you see headlines about investor returns, it reinforces the narrative that the market is out of reach.”

5. Looking Ahead

As the government rolls out its next phase of housing policy, including a potential “Housing Accords 2025” that would tighten lending criteria for investor loans, economists predict that investor activity may slow again. Yet, the IPT’s continued presence ensures that investors will remain a factor in price dynamics.

The Reserve Bank’s latest forecast predicts house price growth of 3 %–5 % over the next 12 months, a modest uptick from the current trend but still below the 10 % pace seen in 2021 (Reserve Bank, 2024). Should the IPT or interest rates shift dramatically, these figures could swing either way.

Bottom Line

Property investors’ return to New Zealand’s real‑estate market is undeniable, but whether they will drive a significant uptick in house prices remains a question of supply constraints, policy measures, and broader economic conditions. First‑time buyers will likely continue to face a competitive market, while investors may find that their returns are tempered by a combination of taxes and higher borrowing costs. As the 2024 market stabilizes, stakeholders on all sides will keep a close eye on the interplay between investor activity, regulatory frameworks, and price movements.