In my latest Real Talk episode I take a hard look at nz interest rates, the macro and microeconomics shaping the property market, and what I think will happen in the next 12–24 months. I’m Nathan Najib, and this is a written version of that conversation with extra context and clear takeaways for buyers, sellers and developers.
The recent fall in nz interest rates (we’re talking short-term fixed rates around 4.75–4.89% at the time I recorded) has nudged confidence up. That’s the obvious reaction: when the Reserve Bank eases, buyers breathe a little easier and some activity returns.
“The OCR does play a role with confidence… but long term, if prices pop back up, we haven’t solved affordability.”
That’s the key — lower rates can restart demand, which without supply-side action risks lifting prices again. If we want sustainable affordability, we need both demand management and a proper push on supply.
New Zealand is one of the worst countries right now to own property, relative to income. Median house price to household income ratios are well above the healthy 3–5x range — we’re seeing figures in the eights in many areas. That’s a cliff; nobody wants a hard landing.
Bottom line: Lowering nz interest rates without increasing housing supply risks a return to runaway prices. We need both pieces working together.
I laid out a few straightforward policy moves on the show. These aren’t political fluff — they work if implemented properly.
If the government dropped nz interest rates to stimulate the economy, they should simultaneously make it cheaper and quicker to build. That’s how you prevent prices from re-accelerating.
Right now, it’s typically cheaper to buy an existing house than to build new. Construction costs and materials remain high — so unless those costs come down through competition and cheaper consenting, new homes will stay pricier than established stock.
The government brought back a residency-style investment route — essentially a pathway for wealthy foreigners to invest (typically $5–$10m). I’m pragmatic here: any money spent in New Zealand is welcome. The fear that this will suddenly inflate prices across the board is overblown — we won’t see millions flooding in overnight.
Quick take: Targeted foreign investment for high-value projects can benefit the economy, especially if paired with measures that boost housing supply for locals.
On the ground, supply has been outweighing demand for the last year or so, but I’m seeing pockets of stronger demand — particularly in Christchurch. North Islanders moving south, better schools and lifestyle reasons are pushing some buyers to pay over average prices, which can skew local stats.
Smart developers are still buying and land-banking, but they’re far less aggressive than in 2021/22. There are thousands of sections slated for release; if councils speed up consents and drop fees, that inventory will hit the market and help stabilise prices.
Given current policy settings and developer pipelines, I expect nz interest rates to linger around the mid 4% territory for a while. With increased supply coming through, I anticipate modest, healthy growth — roughly 2–4% annual increases rather than the dramatic swings of recent years.
If the government instead chases short-term politics with big stimulus without supply side fixes, outcomes could diverge — that’s the risk in my view.
Q: One listener says: ‘Our mortgage is up for renewal on the 5th of October, just before the Reserve Bank’s OCR announcement on the 8th. Should we switch to floating for a week or two to wait for a potential rate drop?’ — What advice would you give in situations like this?”
A: If your mortgage falls due just before an OCR announcement, do the maths. A short floating period of a week or two probably won’t save you much because any initial OCR drop is likely to be modest (think 0.1–0.4%). Consider splitting your loan terms (e.g. some fixed, some shorter term) to keep flexibility.
Q: One of our subscribers writes: ‘We’ve listed our owner-occupied home for auction next week, but foot traffic at open homes has been low.’ In your experience, is buyer interest better measured by the number of builder’s reports requested, or is lower attendance fairly normal in the current market?
A: Foot traffic isn’t everything — quality buyers are. First-home buyers rarely go to auction because of finance and due-diligence constraints. If your property targets first-home buyers or has many potential finance conditions, a deadline or private treaty may get better results. If you have a sought-after location, good schools and strong buyer interest (especially at higher price points), auction can work well.
Rule of thumb: communicate closely with your agent. If there’s little interest early in the campaign, change strategy quickly rather than blindly continuing a campaign that’s not working.
Lower nz interest rates have improved confidence, but they’re not a cure for affordability on their own. Real, lasting change requires a two-pronged approach: manage demand carefully and massively improve supply by cutting red tape, incentivising first-home building and boosting competition in the construction supply chain.
If we get that right, we can expect healthier, sustainable growth in the 2–4% range — and, more importantly, housing that Kiwis can actually afford.
Not usually. Small drops (0.1–0.4%) will help but won’t drastically change monthly payments. Run the numbers for your specific loan amount and consider splitting terms for flexibility.
Currently, existing homes are often cheaper than new builds because construction costs remain high. If you want lower upfront cost and faster settlement, an existing home will typically be cheaper.
Unlikely to move the whole market. High-net worth investors can affect the high-end segment, but mass price inflation from this policy alone is unlikely.
It depends. Auctions work well for high-demand, high-quality properties in sought-after locations. For properties aimed at first-home buyers or where buyers need finance subject-to-conditions, deadlines or private sales can be better.
NZ interest rates matter — but supply matters at least as much. Fixing housing unaffordability requires both sensible monetary settings and serious supply-side reform.