2025 Kicks Off with Stable House Prices – Winners by Region

Topic #1:  Good Returns 9th of April - BREAKING: OCR: 3.5% - Further reduction in OCR appropriate

Topic #2: NZ Herald 8th of April - House prices flat to start 2025 – which regions fared better than others?

Topic #3: Good Returns 8th of April - Longer term fixed interest rates slowly bite into floating terms

Topic #4: NZ Herald 8th of April -First-home buyers face challenges as KiwiSaver balances drop

Topic #5: Corelogic 9th of April -NZ residential construction cost growth slows to near-record low

Chapters

• 1:00 Topic #1: Good Returns 9th of April - BREAKING: OCR: 3.5% - Further reduction in OCR appropriate
• 4:00 Topic #2: NZ Herald 8th of April - House prices flat to start 2025 – which regions fared better than others?
• 7:06 Topic #3: Good Returns 8th of April - Longer term fixed interest rates slowly bite into floating terms
• 10:23 Topic #4: NZ Herald 8th of April -First-home buyers face challenges as KiwiSaver balances drop
• 13:59 Topic #5: Corelogic 9th of April -NZ residential construction cost growth slows to near-record low

Transcript

 Hi everyone. I'm Debbie Roberts, owner and financial adviser at Property Apprentice. Join me today for this Week in Review where I talk about current events for the everyday investor and home buyer. Our topics for this week.   📍 Topic number one, from adviser on the 9th of April, breaking news OCR 3.5%-

further reduction in OCR appropriate.   📍 Second topic from New Zealand Herald on the 8th of April. House prices flat to start 2025. Which regions fared better than others?  Topic   📍 number three, from Good Returns on the 8th of April. Longer fixed term interest rates slowly bite into floating terms.  Fourth   📍 topic from the New Zealand Herald on the 8th of April-

first, home buyers face challenges as KiwiSaver balances drop.   📍 And topic number five From Core Logic on the 9th of April, New Zealand residential construction cost growth slows to a near record low.  

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So starting off for this week in review from Good Returns on the 9th of April, breaking OCR 3.5% further reduction in OCR appropriate.

The Reserve Bank's Monetary Policy Committee had reduced the official cash rate, the OCR, by 25 basis points to 3.5%. This decision comes as annual inflation remains close to the midpoint of the committee's, one to 3% target band and broader economic conditions evolve in line with earlier expectations. While higher export prices and a weaker exchange rate of supported primary sector incomes, household spending, and residential investment remain subdued.

Recent interest rate cuts have yet to fully influence the economy and spare productive capacity persists largely due to early monetary tightening, sluggish global growth, and reduced government spending. The committee noted that although recent economic data has aligned with forecasts from February, the economy continues to operate below capacity.

Inflation expectations and core inflation levels indicate that consumer price inflation should remain near the 2% midpoint over the medium term. Newly imposed global trade barriers, particularly escalating tariffs involving the United States and several trading partners have increased uncertainty around the international economic outlook.

These developments are expected to negatively impact global growth with flow on effects for New Zealand's export demand, business investment, and consumer confidence. While tariffs may push prices up in countries that impose them, the broader inflation outlook remains uncertain. Inflation trends could be influenced by protectionism, supply chain disruptions, and reduced global productivity.

However, New Zealand might benefit from lower import costs of traders, diverted, and global oil prices fall. Most committee members believe the balance of risks has shifted downward for medium to medium term inflation in New Zealand. Though some see the risks as more evenly balanced. The effects of tariffs on inflation will take time to emerge with immediate price increases in tariff imposing economies, and slower adjustments to global supply chains.

The committee emphasized that monetary policy cannot counteract the long-term supply side. Impact of trade protectionism. Although the current inflation rate is stable and there is capacity in the economy, they decided that additional monetary stimulus is necessary. 

The committee concluded that lowering the OCR is consistent with its mandate to maintain price, stability, and support sustainable economic growth. It also signaled that there's room for further rate cuts if required, depending on how inflation re pressures evolve in response to domestic and global developments.

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Topic number two, from the New Zealand Herald on the 8th of April. House prices flat to start 2025. Which regions fared better than others? National property prices in New Zealand showed minimal movement in the first quarter of 2025 rising just 0.2%. 

Auckland's average home value declined slightly by 0.1% to $1.24 million marking its first quarterly decrease since October, 2024. Other major centers showed mixed results. Taurang values rose 0.4% while Queenstown Lakes dipped 0.1%, Wellington and Waikato both fell 0.3% to $838,916 and $787,886 respectively.

More notable growth was seen in Rotorua, Whangarei, Nelson and Christchurch. QV operations manager James Wilson, described the market as soft with minor monthly fluctuations and overall stagnation.  Despite lower interest rates, economic uncertainty and job and security are making buyers cautious. He noted an oversupply of listings is helping keep prices stable, and said first home buyers are becoming more prominent in the market due to reduced competition.

Wilson expects this flat trend to persist through autumn and winter until interest rate relief and labor market recovery gain momentum. Separately, CoreLogic's Home value index showed a 0.5% rise in March following a 0.4% increase in February. Chief Economist Kelvin

Davidson said the recent drop in mortgage rates has started influencing prices, but a large number of listings has tempered growth.

He added that while the market is stabilizing, a significant upswing in prices is unlikely due to lending restrictions such as debt-to-income caps, offering some relief to prospective buyers. My thoughts on this is that it's not so much the debt-to-incomes that are restricting buyers at the moment. My thoughts are that it's uncertainty in the market.

You know, particularly people worried about potentially losing their jobs. There's still quite a lot of people going through liquidations and that sort of thing, which is stopping people from entering the property market.   📍  📍 If you'd like to learn more about investing in property or the property market in general, join me at one of our free events called How to Succeed With Property Investing.

I'll discuss strategies for successful investing from my perspective as an experienced investor and financial adviser. And these events are available live online. Check out property app printers.co nz for upcoming dates and register today. We don't sell property, so it's all about increasing your knowledge to reduce your risk.

 If you've already been to one of our free events   📍  📍 and you'd like to find out more about how we can help you to reach your financial goals, you can also book a no obligation phone call or meeting with my husband Paul Roberts via the website. That's www.propertyapprentice.co.Nz.  

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Topic number three, from Good Returns on the 8th of April.

Longer term fixed interest rates slowly bite into floating terms. Two-year fixed mortgage rates are beginning to claim a larger portion of new lending rising from 4.9% in January to 11.2% or $451 million in February. This shift coincides with the OCR dropping to 3.75  with expectations of a further decline to 3.25% in the coming months.

Despite forecasts suggesting more borrowers will shift to two year fixed terms as their existing higher rate loans expire, most continue to favor floating rates. In February, nearly 40% of new mortgages were on floating rates. That's up from 31.8% in January. Among owner occupiers $1.607 billion out of $4.036 billion in new loans

were on floating terms. Short term options floating in fixed terms up to one year, made up 79.2% of all new mortgage lending according to the Reserve Bank C 71 Data series. In contrast, longer terms of 18 months or more, only accounted for 20.8%. Fixed six-month lending dropped from 30% in January to 17.5% while one year fixed loans  decreased to 21.8% from 27.7% for property investors use of two year fixed terms increased sharply from 3.6% to 11.6%.

Still, 95.7% of investor loans were on either floating or short-term fixed rates with floating alone, making up 43%. That's an increase from 35.1% in January. Overall, new residential investor mortgage lending rose to $1.7 billion in February, 

fixed term lending, however, fell to 58.7%. That's down 8% from the previous month. Financial markets have reacted strongly to international instability, particularly tensions from global trade disputes. Wholesale interest rates have declined with trades now expecting further cuts to the OCR from the current 3.75 down to 2.5%.

Kiwibank Chief Economist Jared Kerr noted that while some are concerned about inflation, the broader economic risks, particularly the impacts of tariffs on global growth, suggests that central banks will need to reduce, not increase interest rates. He pointed out that the two year swap rate a benchmark for pricing fixed mortgage rates, has dropped from 3.45% to 3.1%.

Markets have now priced another immediate OCR cut with some expecting a 50 basis point drop. Traders are also anticipating a final rate of around 2.65%, down from 3% just a week prior. So at the moment it appears that most people are expecting interest rates to continue to reduce over the short to midterm.

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Topic number four, from New Zealand Herald on the 8th of April. First time buyers face challenges as KiwiSaver balances drop. Mortgage brokers or mortgage advisers, as were now called a reporting a wave of concern from first home buyers as recent market turbulence triggered by the US tariffs has caused noticeable drops in KiwiSaver balances.

The NZX experienced its sharpest fall since March, 2020. And global markets, particularly in the US, have responded with heightened volatility. As a result, many KiwiSaver members have seen their balances declined by thousands of dollars. While long-term savers can typically ride out such fluctuations, those close to withdrawing funds, especially first home buyers are feeling the impact more acutely.

Mortgage adviser Karen Tatterson has noted increased anxiety among her first home buyer clients. Similarly, Glen McLeod of Link Advisory said several clients had commented on balanced dip, though it hasn't deterred most from continuing with their deposit plans. He emphasized the importance of seeking financial advice to ensure the KiwiSaver fund align with personal timelines and risk tolerance. In some cases, buyers have had to find extra money at short notice to cover shortfalls caused by market drops.  One buyer reported needing an additional $2,000 due to a sudden decrease in their KiwiSaver balance.

David Boyle, general Manager at Fisher Funds stressed the need for financial advice before making any changes to fund types. He recommended discussing options with either a financial adviser or the KiwiSaver provider to fully understand how market changes affect individual plans. Boyle also highlighted that those needing access to their money  soon should typically be in conservative funds, not higher risk growth funds designed for long-term investing.

However, the popularity of growth funds in recent years due to stronger returns means that some short-term savers may now be exposed to these types of unexpected losses. If a first time buyer finds himself in a growth fund too close to their purchase date, Boyle suggested exploring alternative funding sources to avoid withdrawing at a loss.

 He also recommended discussing options with banks and providers to explore any available flexibility. Switching to a cash fund shortly before purchasing could offer more certainty, ensuring that buyers know exactly how much is available for their deposit. However, experts caution against trying to time the market.

Sam Stubbs, founder of Simplicity, KiwiSaver, emphasized that market timing's highly unpredictable and often counterproductive. The priority he said should be selecting the fund best suited to individual needs. Boyle concluded that these recent events serve as a timely reminder. Those planning to buy in the near future should consider shifting to a more conservative fund, well in advance to reduced exposure to market swings.

However, if you switch to a more conservative fund too soon, you could miss out on potential growth. One of the benefits of funds like KiwiSaver is that if you are contributing regularly to it, you get the benefit of dollar cost averaging, which means that when share values drop, then the same amount of money is purchasing a higher amount of shares, so that eventually when those funds recover, you will reap the rewards of that.

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Topic number five for this week. In review from CoreLogic on the 9th of April, New Zealand residential construction cost growth slows to a near record low. New Zealand's residential construction costs are rising at one of the slowest rates since records began. According to CoreLogic, new Zealand's latest Coredell construction cost index. Over the past year

the index increased by just 0.9%, marking the second lowest annual growth since its launch in in 2012. In the March 2025 quarter construction's costs rose 0.3% down from 0.6% in the previous quarter, and well below the long-term quarterly average of 1%. 

Kelvin Davidson, chief Property Economist at CoreLogic New Zealand explained that after years of sharp increases during the Covid era building, boom, the pace of cost growth has significantly slowed. He noted that while material prices have largely stabilized, labor costs remain firm, meaning the overall cost to build is not decreasing. The latest quarter showed mixed material price movements. Roof flashings and sheet metal rose by three to 4%. Structural steel increased about 1% while kitchen cabinetry fell by 2%, and PVC plumbing components dropped by 3%.

Davidson said, these trends reflect a return to more typical supply and demand dynamics. Unlike the widespread surges seen in 2021 and 2022, a major contributor to the slowdown is the drop in new dwelling consents, which are now around one third below their peak levels. Most regions have seen declines over the past year with Otago being the exception, showing a 25% increase.

With reduced building activity, some contractors have excess capacity, which is helping keep prices in check. Although the sector appears stable, Davidson warns that signs of a recovery remain uncertain. He added that while lower interest rates and improved lending conditions may support a gradual rise in demand for new builds, a return to the rapid cost increases of 2022 is unlikely.

For now, construction costs are steady, neither spiking nor falling, which provides some relief for industry professionals and homeowners.   📍  📍 With interest rates fluctuating and global uncertainty impacting borrowing costs, making the right mortgage decisions more crucial than ever. Join me at one of our free events called How to Succeed With Property Investing.

These events are all available online so you can gain valuable insights and strategies tailored to today's market conditions, whether you're an experienced investor or just getting started as a first home buyer. This free session will equip you with the key tools and insights to make confident, informed decisions.

Don't miss out. Register today and take the next step towards achieving your financial success. In our free events, I'll also tell you more about how we help our clients achieve their investing goals. So if you are interested in finding out more about what we do, visit www.propertyapprentice.co.Nz today and sign up for one of our free events.

 If   📍  📍 you've already been to one and you'd like to know more about how we can help you on your individual journey, book a no obligation phone call or meeting with my husband Paul Roberts through our website. That's www.propertyapprentice.co.Nz.  Thanks for listening.