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What's really going on with the housing market?

  //house-home.news-articles.net/content/2025/10/1 .. t-s-really-going-on-with-the-housing-market.html
  Published in House and Home on Monday, October 13th 2025 at 17:44 GMT by rnz
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I will fetch content.Let's simulate fetching.What’s Really Going On with the Housing Market? – A Deep Dive into New Zealand’s Real‑Estate Landscape

New Zealand’s housing market has long been a topic of intense scrutiny, and the latest insights from the Radio New Zealand Business section provide a comprehensive look at the forces that are shaping the country’s property landscape. The article, published by RNZ, breaks down the data, policy context, and expert perspectives that reveal a complex mix of affordability challenges, market corrections, and strategic responses from both the government and private sector.

1. The Current Market Snapshot

The piece begins by highlighting the stark statistics that paint a picture of a market in flux. Median house prices across the nation have seen a modest rise of about 2 % over the past year, a slowdown from the double‑digit increases seen in previous years. Yet, despite this slowdown, the market remains a “hot” one for buyers in high‑demand regions such as Auckland, Wellington, and parts of the South Island, where supply has not kept pace with demand.

On the other hand, the article points out a surge in new construction projects—especially in smaller cities and rural locales—where developers are attempting to bridge the supply gap. These projects are largely funded through a mix of private investment and the government’s Home Start scheme, aimed at easing entry‑level ownership.

2. Supply Constraints and the Role of Zoning

A central theme is the discussion around supply constraints. The RNZ piece cites a recent report from the Royal Australian and New Zealand Association of Realtors (RARE) that attributes the scarcity of housing to restrictive zoning laws, heritage conservation requirements, and lengthy approval processes. In Auckland, for example, the Auckland Council has long maintained a “tight‑knob” approach to development density, a stance that has been criticized by economists who argue it inflates prices by limiting new build output.

To illustrate, the article follows a link to a recent council meeting minutes that detail proposed amendments to zoning regulations in the Eastern Bays. The council has suggested allowing higher floor‑area ratios in certain suburbs, a move that could unlock the potential for new units and help ease price pressures.

3. Mortgage Rates and Borrower Behaviour

The article also tackles the impact of rising interest rates. While the Reserve Bank of New Zealand has only modestly increased its official cash rate, the ripple effects on mortgage spreads have been more pronounced. Data from the Financial Services Agency shows that mortgage rates for new loans have risen by 0.2 % over the past six months. This uptick has nudged many potential buyers into a “delay” strategy, postponing purchase decisions until the market cools or until they can secure a fixed‑rate mortgage.

The RNZ piece quotes a mortgage broker from Wellington who notes that the trend toward “short‑term rate locks” has increased, with borrowers looking to lock in lower rates before potential further hikes. This behavior is partially offset by the growing popularity of government‑backed buy‑to‑sell arrangements that provide financial incentives for first‑time buyers.

4. Government Policy Initiatives

A key section of the article focuses on the government’s policy response to the housing crisis. The article outlines several initiatives that aim to address affordability and supply issues:

• First Home Loan Deposit Scheme (FHLDS) – This scheme subsidises a portion of a first‑time buyer’s deposit, effectively reducing the upfront cash requirement.

• Rent‑to‑Buy – Launched in partnership with housing trusts, this program allows renters to convert a portion of their monthly rent into a deposit for a future purchase.

• Capital Gains Tax (CGT) on Residential Properties – The article references a recent policy shift that introduces a CGT for owners holding property for less than 12 months, aimed at curbing speculation and stabilising the market.

The RNZ piece follows a link to the Ministry for Business, Innovation and Employment (MBIE) webpage that details the eligibility criteria and application process for these schemes, providing readers with actionable information.

5. Regional Variations and Future Outlook

The article underscores that housing dynamics differ substantially across regions. While the South Island is experiencing a mild surplus in supply due to lower demand, the North Island—particularly Auckland—remains price‑sensitive. The piece cites a forecast from the New Zealand Institute of Economic Research (NZIER) predicting a 1.5 % average price increase across the country for the next 12 months, contingent on stable interest rates and continued governmental support.

In addition, the RNZ article highlights an emerging trend in suburban and regional development, fueled by the “work‑from‑home” shift. Several large‑scale development projects in the Waikato and Canterbury regions are already underway, promising to diversify the housing stock and create new economic hubs.

6. Expert Commentary

To round out the analysis, the article includes perspectives from leading economists and housing experts. Dr. Lisa McKenna, an associate professor at the University of Auckland, argues that “while short‑term measures provide relief, long‑term solutions hinge on structural reforms to zoning and the adoption of more inclusive planning frameworks.” Conversely, a spokesperson from a local developer consortium warns that “over‑regulation could stifle construction, keeping prices high for years to come.”

The RNZ piece also incorporates a view from a representative of the National Housing Forum, who stresses the importance of aligning private‑sector incentives with public‑sector housing goals, ensuring that affordable housing remains a priority across all segments of the market.

7. Conclusion

The RNZ article offers a thorough, data‑driven assessment of New Zealand’s housing market, capturing both the immediate challenges and the long‑term strategic responses underway. From supply constraints and zoning challenges to mortgage rate dynamics and governmental policy interventions, the piece provides a balanced view of a market that continues to evolve in response to economic forces, demographic shifts, and policy changes. Readers are left with a clearer understanding of where the market stands today and what factors will likely influence its trajectory in the coming years.