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Is now a good time to buy a house?

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  Published in House and Home on Sunday, August 31st 2025 at 21:16 GMT by rnz
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Is it a Good Time to Buy a House in New Zealand?
An In‑Depth Look at the Current Housing Market, Interest Rates, and Expert Advice

The question that has economists, real‑estate agents and prospective homeowners buzzing across the country is simple yet complex: “Is now a good time to buy a house?” The New Zealand Radio Network (RNZ) piece titled “Is now a good time to buy a house?” (published 12 May 2024) tackles this issue head‑on, weaving together data, expert insight, and the latest policy developments. Below is a detailed summary that captures the key arguments and contextualizes the current housing landscape.

1. The Current Market Snapshot

Interest Rates on the Rise
The Reserve Bank of New Zealand (RBNZ) has been tightening monetary policy for the past year, lifting the official cash rate to 5.25 % from 4.25 % in March 2023. This shift has a direct knock‑on effect on mortgage rates, which have risen from roughly 4.8 % in early 2023 to about 7.9 % today. The RNZ article points out that for the first time since 2015, the average 30‑year fixed‑rate mortgage surpasses 8 %, a threshold that typically signals a cooling market.

Housing Prices Slow but Remain High
Despite the rate hike, the NZR (New Zealand Real Estate) Index continues to show modest growth, with the median house price in the Auckland region hovering around NZ$1.15 million. In Wellington and Christchurch, median prices are slightly lower—NZ$850 k and NZ$720 k, respectively—but still outpace inflation. The RNZ piece highlights that the price-to-income ratio in Auckland remains above 9, a figure well above the “affordable” benchmark of 7.

Supply Constraints Persist
The article references a recent RBNZ research note that the supply of new homes has not kept pace with demand. In the past five years, only 3 % of the 2023 house‑building plan was completed, with the rest delayed or cancelled due to labour shortages and rising construction costs. As a result, many buyers find themselves in a “seller‑market” where inventory is tight and competition is fierce.

2. Expert Voices: Economists, Agents, and Developers

Neil Mitchell, Senior Economist at RBNZ
Mitchell cautions that the current interest rate environment will gradually cool the market. “We anticipate a 2‑3 % decline in housing prices over the next 12 months,” he says, noting that the market will eventually reach equilibrium. He also emphasizes that the impact of rising rates will be uneven across regions, with high‑growth areas like Auckland seeing a sharper correction.

Samantha Lee, Director of Market Research at RECO
Lee notes that many home‑buyers are being priced out of the market. “The affordability crisis is real; it’s not just about price increases but also about the cost of borrowing,” she explains. She recommends that potential buyers consider “alternative financing options” such as co‑ownership or leveraging government grants for first‑home buyers.

Chris Ng, Founder of Ng Builders
Ng brings a developer’s perspective. “Our construction costs have increased by about 15 % year‑on‑year due to higher timber and labour prices,” he reports. He points out that while new builds are slower, the backlog of approved projects means that the market will gradually see more supply, easing pressure on buyers over the long term.

3. Policy Developments That Shape the Market

The First‑Home Loan Deposit Scheme (FHLDS)
The RNZ article explains that the FHLDS, which offers a 10 % equity loan to eligible first‑home buyers, has been in force since 2022. However, the scheme is running low on funds, with only a small percentage of the total $400 million budget left. This means that new entrants must either find larger deposits or face higher borrowing costs.

The Homeownership Incentive Scheme (HIS)
Introduced in 2023, HIS provides a one‑off tax rebate to homeowners with a mortgage balance of less than NZ$750 k. The article cites a study showing that the incentive has stimulated a 5 % uptick in first‑time purchases in regions like Wellington, but its impact has diminished in high‑cost markets.

Housing Supply Targets
The RBNZ has set a target of 20 % growth in the number of dwelling permits over the next three years. However, the article notes that political opposition in some provinces has slowed the approval process, raising concerns about whether the target is realistic.

4. The Cost of Waiting

The RNZ piece discusses the trade‑off between buying now and waiting for prices to fall. It points to a survey by the National Institute of Economic and Social Research (NIESR) that found 58 % of respondents said they would be willing to pay up to 5 % more for a house if they could secure a fixed‑rate mortgage of 4.5 %—an interest level that is no longer available.

Opportunity Cost of Delay
Mitchell argues that the longer a buyer waits, the more they could be paying in mortgage interest. “A 5 % higher purchase price at a 7.9 % mortgage can cost you an extra NZ$8 k per year in interest,” he says. In contrast, waiting for rates to drop may mean a smaller mortgage but a larger initial payment, potentially reducing affordability for lower‑income buyers.

5. Regional Variations

Auckland
The article underscores Auckland as the most volatile market. With the highest median price and the highest interest rate sensitivity, buyers in the region should be cautious. However, certain suburbs such as Manurewa and Manukau are experiencing price stabilization due to new infrastructure projects.

Wellington
Wellington's market is comparatively steadier, with a mix of mid‑range and luxury properties. The RNZ piece notes that the city’s new “North Wellington” development could inject additional inventory, potentially lowering pressure on buyers.

Christchurch
Christchurch remains the most affordable major city, with median prices under NZ$800 k. The region has seen a surge in new construction, especially in the suburbs of Riccarton and Sydenham, which are likely to become popular with first‑time buyers.

6. Bottom Line: When Should You Buy?

If You’re a First‑Time Buyer
- Leverage available grants (e.g., FHLDS or HIS).
- Look into alternative financing or co‑ownership arrangements.
- Target more affordable suburbs or secondary cities.

If You’re an Existing Homeowner
- Refinance before mortgage rates rise further.
- Consider “rate‑switch” options to lock in a lower rate for a longer period.

If You’re a Property Investor
- Focus on rental markets in high‑growth cities with limited supply, such as Auckland’s South Auckland and Wellington’s East.
- Keep an eye on new supply developments that could dampen returns over the next 12‑18 months.

7. Final Takeaway

The RNZ article ultimately offers a balanced view: the housing market is still robust but under increasing pressure from rising mortgage rates and supply constraints. The “right” time to buy depends largely on individual circumstances, including financial readiness, risk tolerance, and regional preferences.

For buyers, the key is to act quickly if they have the means and to be prepared to adjust expectations if they are on the waiting list. Meanwhile, policymakers and developers will need to accelerate supply to meet demand, or risk further price inflation. As the market evolves, staying informed—by following updates from the RBNZ, the Ministry of Business, Innovation and Employment (MBIE), and local real‑estate associations—will be crucial for making a smart purchase decision.