Authored by the expert who managed and guided the team behind the New Zealand Property Pack
Everything you need to know before buying real estate is included in our New Zealand Property Pack
What will happen in New Zealand’s real estate market? Will prices rise or fall? Is Auckland still a prime location for international buyers? How are New Zealand’s government policies and taxes shaping the real estate landscape in 2025?
We’re frequently asked these questions because we’re deeply engaged in this market. Through our collaborations with real estate agents, property developers, and clients purchasing homes in New Zealand, we’ve gathered firsthand insights.
That’s why we crafted this article: to deliver clear answers, insightful analysis, and a comprehensive perspective on market predictions and forecasts.
Our aim is straightforward: to ensure you feel informed and confident about the market without needing to search elsewhere. If you think we missed the mark or could improve, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll strive to enhance this content for you.
How this content was created 🔎📝
1) Rental yields in Auckland will rise as more international students move to the city
Auckland is buzzing with international students, hosting 8,470 at the University of Auckland in 2023, the most in New Zealand.
Thanks to government efforts, international student numbers in New Zealand jumped by 67% in 2023. Education New Zealand (ENZ) is actively drawing students from all over, showing the government's dedication to boosting international education. This means more students will be looking for places to live, pushing up demand for rentals.
There's a real crunch for student housing in Auckland. In 2023, the University of Auckland had 8,500 applications for just 4,500 beds. This gap is likely to push students to find other housing, which could drive up rental prices.
Economic forecasts are optimistic, predicting a boom in Auckland's education sector. International student enrollments shot up by 43% in the first eight months of 2023. This surge means more students needing housing, which is good news for rental yields.
With more students coming in, landlords might see better returns. The shortage of student accommodation is a key factor, as it forces students to look for other options, potentially increasing rental prices.
As Auckland continues to attract international students, the rental market is poised for growth. More students mean more demand for housing, and this trend is expected to continue.
Sources: Education New Zealand, Erudera, Property and Build, The PIE News
2) Rural rents will rise as more people move away from cities for lifestyle changes
In recent years, there's been a notable surge in demand for rural properties.
People are increasingly drawn to the countryside, with mortgage applications for rural areas skyrocketing by 80%, as highlighted by Fannie Mae. This shift is largely due to individuals seeking more space and a lifestyle change that rural living offers.
Internal migration is a key factor in this trend. Take Horowhenua, for instance, where 70% of its population growth comes from people relocating from other parts of the country. Similar patterns are seen in Thames-Coromandel and Selwyn, with 68% and 62% of their growth attributed to internal migration, respectively.
The rise of remote work has also played a significant role. Many have realized they can work from anywhere, prompting them to move to rural areas for a better quality of life. This has led to increased demand for housing in rural communities, as people seek more comfortable and spacious living environments.
Rural areas are becoming increasingly attractive as people look to escape the hustle and bustle of city life. The ability to work remotely has made it possible for many to consider this lifestyle change, further fueling the demand for rural properties.
As more people make this shift, it's expected that rents in rural areas will continue to rise, reflecting the growing interest in these regions.
Sources: Infometrics, Fannie Mae
We did some research and made this infographic to help you quickly compare rental yields of the major cities in New Zealand versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Wellington rents will drop slightly as more housing becomes available
In Wellington, the rental market is shifting due to an increase in housing supply.
Over the past couple of years, Wellington has seen a 103% rise in available rentals, giving renters more choices. This surge in options has softened the market, making it easier for tenants to find a place that suits their needs.
By October 2024, the number of homes for sale in Wellington hit near decade highs with about 32,300 homes on the market. This is a 26% jump from the previous year, creating more competition among landlords. As a result, rental prices might dip as landlords strive to attract tenants.
The government's move to reinstate interest expense deductions from April 1, 2024, is expected to boost investor confidence. This could lead to even more housing supply, potentially pushing rents down further. Additionally, favorable mortgage rates are nudging tenants towards buying homes, which reduces rental demand.
With more homes available, landlords are feeling the pressure to offer competitive prices. This trend is particularly noticeable in areas where up-market family homes are in demand, as landlords aim to fill vacancies quickly.
As the market adjusts, renters in Wellington might find themselves in a better position to negotiate, thanks to increased housing options and a shift in tenant preferences. The landscape is changing, and those looking to rent or buy have more leverage than before.
Sources: Property Plus, CoreLogic, Tommy’s Rentals, Squirrel
4) Property prices in Hamilton will rise unexpectedly as it becomes a major logistics hub
Hamilton is becoming a hot spot for property buyers due to its growing role as a logistics hub.
In 2023, the New Zealand Transport Agency announced a $1.5 billion investment in Waikato's transport system, making Hamilton more appealing for logistics. This includes $126 million for public transport and $54 million for walking and cycling, promoting eco-friendly travel. Such improvements are turning Hamilton into a key player in logistics.
Demand for warehousing is on the rise, with Kmart opening a 40,000 square meter distribution center at Hamilton's Ruakura Superhub. This facility is crucial for Kmart’s North Island operations, supplying 26 stores across New Zealand. This move underscores Hamilton's growing importance in logistics.
Hamilton's location is a major advantage. It's at the southern tip of New Zealand’s Golden Triangle, which includes Auckland and Tauranga. This strategic position makes it perfect for logistics, especially with the boom in e-commerce needing efficient solutions.
As e-commerce grows, Hamilton's logistics capabilities are becoming more vital. The city's infrastructure investments and strategic location are attracting businesses looking for efficient distribution solutions.
With these developments, Hamilton is poised for a surprising rise in property prices, driven by its transformation into a logistics hub.
Sources: NZ Transport Agency, Te Ao News, MBIE
6) Demand for homes with office spaces will rise as remote work becomes more common
In New Zealand, nearly 20% of employed adults now work mostly from home, a significant jump from 8.5% in 2013.
This shift has sparked a noticeable change in the real estate market, especially in places like Wellington, Auckland, and Bay of Plenty. In Wellington, for example, property searches have surged by 47.7%, and engagements per listing have skyrocketed by 88.5%. People are clearly on the hunt for homes that can double as workspaces.
Globally, the trend is similar, with 65% of the workforce preferring to work remotely full-time and 32% opting for a hybrid model. This global preference is likely reflected in New Zealand, pushing the demand for homes with office spaces even higher.
New Zealand media often highlight the perks of remote work, like better productivity and flexibility, making homes with office spaces even more appealing. Plus, the country's investment in internet and tech infrastructure has made working from home more practical, boosting the attractiveness of these properties.
People are also spending more on home office furniture and equipment, indicating a commitment to creating comfortable work environments at home. This trend is evident worldwide and is certainly relevant in New Zealand as well.
Sources: RNZ, Raine & Horne, Pumble
7) Demand for homes in Napier's art deco areas will grow as cultural tourism rises
Napier's art deco neighborhoods are becoming a hot spot as cultural tourism takes off.
Last year's cruise season was a game-changer, with over 130,000 visitors docking at Napier Port, making it the biggest season ever for Hawke’s Bay. This surge in visitors shows just how much interest is growing in the area.
The 2024 Art Deco Festival was a massive hit, drawing in more than 50,000 people and pumping millions into the local economy. This festival doesn't just celebrate the stunning art deco architecture; it also keeps tourists coming back all year, which is crucial for preserving Napier's unique heritage.
Napier is upping its game with new investments in tourism infrastructure, like the brand-new wharf, making it even more attractive to visitors. The buzz from media coverage and social media is putting Napier on the map as a must-see cultural destination, showcasing its charm to people worldwide.
With all this attention, Napier's art deco neighborhoods are set to become even more popular. The combination of increased tourism and investment is a win-win for the city, ensuring its architectural gems are preserved and appreciated by future generations.
As cultural tourism continues to rise, Napier is perfectly positioned to capitalize on this trend, offering visitors a unique blend of history, architecture, and vibrant local culture.
Sources: Scoop, NZ Herald, NZ Herald
8) Interest in coastal properties will drop as climate change risks become more recognized
In New Zealand, climate change is reshaping the real estate landscape, especially for coastal properties.
Insurance companies are increasingly wary, pulling back from covering homes in high-risk coastal areas. This trend started around 2023 and 2024, and it's causing insurance premiums to soar, making these properties less affordable for many potential buyers.
Coastal flooding is becoming more frequent and severe, with events like the upper North Island floods and Cyclone Gabrielle highlighting the vulnerability of these areas. By 2050, sea levels are expected to rise significantly, further escalating the flooding risk.
Government reports, such as the 2024 Ministry for the Environment report, emphasize that rising sea levels pose a significant threat to coastal communities. This has prompted policy changes, including the construction of sea walls and the implementation of early warning systems to adapt to these challenges.
As a result, buyer preferences are shifting. People are becoming more cautious about investing in coastal properties due to the potential risks and costs associated with climate change. This growing awareness is likely to lead to a decline in interest in these properties over time.
In the real estate market, the focus is gradually moving away from coastal areas as buyers weigh the long-term implications of climate change. This shift is driven by the increasing awareness of the financial and environmental risks involved.
Sources: Insurance News, Ministry for the Environment, The Treasury
We have made this infographic to give you a quick and clear snapshot of the property market in New Zealand. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Diverse housing preferences and designs will emerge as the multicultural population grows
New Zealand's multicultural population has been growing rapidly, with 136,000 new migrants arriving by the end of 2023.
This influx means that nearly a third of the population is now born overseas, bringing a rich tapestry of over 200 birthplaces and more than 150 languages into the mix. As a result, there's a rising demand for homes that cater to diverse cultural needs, like specific kitchen layouts or prayer rooms.
With the 2023 Census data showing more children born outside marriage and an increase in de facto relationships, housing preferences are shifting. People are looking for homes that accommodate various household compositions and family structures, reflecting these societal changes.
The median age in New Zealand is now 38.1 years, indicating an aging population that often values multi-generational living. This trend aligns with many multicultural families' cultural values, where multiple generations live under one roof.
Architectural trends are evolving too, incorporating diverse cultural elements to reflect the ethnic diversity of the population. This means you might see homes with unique design features that cater to different cultural preferences.
Sources: Scoop, Pathways NZ, Xinhua News
10) Demand for large family homes will drop as more people choose compact living spaces
In New Zealand, more people are choosing compact living spaces over traditional large family homes.
Urbanization is a big driver of this trend. With New Zealand's urban population growing by 2.19% in 2023, more than 4.5 million people now live in cities. This urban boom is pushing folks to seek out smaller, more efficient homes that fit city life better.
Property prices are another major factor. In cities like Auckland, the average home price shot past NZ$1 million by November 2022. This makes large homes a stretch for many, nudging people towards more affordable, smaller options.
Demographics are shifting too. Even though urban population growth in places like Auckland has slowed, it's still at a solid 2.5% in 2024. This suggests a trend towards smaller households, often led by young professionals who want compact, centrally located homes.
There's also a buzz around minimalist and sustainable living. Many are on the hunt for eco-friendly and energy-efficient homes, which often come in smaller packages.
These changes reflect a broader lifestyle shift. People are prioritizing convenience and sustainability, making compact living spaces more appealing than ever.
Sources: Macrotrends, Global Property Guide, Infometrics
11) Rural property prices will rise as more people pursue self-sufficient living
In New Zealand, rural property prices are climbing as more people seek self-sufficient lifestyles.
There's a growing trend of folks wanting to live sustainably and independently, which is driving up interest in rural properties. Real estate agents are noticing a surge in inquiries for these types of homes, as people look to connect more with nature and enjoy a simpler way of life.
The Real Estate Institute of New Zealand (REINZ) has observed a 26.5% jump in farm sales over a recent three-month period, showing that many are leaving city life behind. This shift is largely fueled by the desire for self-sufficiency, with more people investing in rural areas.
Internal migration is also a big factor here. Infometrics points out that regions like Selwyn are seeing a significant influx of new residents. This urban-to-rural movement is expected to keep growing as people seek the peace and space that rural living offers, along with the chance to grow their own food.
Remote work is another game-changer. With the ability to work from anywhere, many are choosing to move to the countryside, further boosting demand for rural properties. As working from home becomes more common, this trend is likely to continue, pushing property prices even higher.
Sources: Scoop, Infometrics, Farmers Weekly
Don't buy the wrong property, in the wrong area of New Zealand
Buying real estate is a significant investment. Don't rely solely on your intuition. Gather the right information to make the best decision.
12) Demand for smaller, accessible homes will grow as the population ages
New Zealand's population is aging rapidly, with the number of people over 65 expected to hit 1 million by 2028.
As people get older, they often look to downsize, seeking homes that are easier to manage and maintain. This isn't just about having less space; it's about making life simpler as mobility becomes a concern.
There's a noticeable trend in building retirement villages and age-friendly housing. Take the Western Village in Kaitāia, for example, which offers one-bedroom units specifically for those aged 50 and above. These homes are designed with accessibility in mind, making daily life more convenient for older adults.
Developers are catching on to this demand, focusing on creating spaces that cater to the needs of an aging population. The goal is to provide comfortable living environments that support independence while addressing mobility challenges.
For those considering a move to the country, this shift means more options for smaller, accessible homes. It's a chance to find a place that suits your lifestyle as you age, with features that make everyday tasks easier.
With the aging population, the real estate market is adapting, offering more choices for those looking to downsize. This trend is reshaping the housing landscape, making it more inclusive for older adults.
Sources: New Zealand's Data Explorer on the Well-being of Older People, Housing, Downsizing and Older People in a Changing Society, Housing Options for Older People in Aotearoa New Zealand
15) Luxury property prices in New Zealand will dip slightly due to ongoing global economic uncertainties
The luxury property market in New Zealand is expected to see a slight decline due to ongoing global economic uncertainties.
One of the key reasons is the impact of rising interest rates on mortgage affordability. Although rates were on a downward trend in 2024, they were anticipated to stabilize between 3.00% and 4.00%, with fixed rates from major banks hovering around 4.50% to 6.00%. This stabilization could make it more challenging for potential buyers to afford luxury homes.
Foreign investment has also taken a hit, largely due to these economic uncertainties. In 2024, the property market outlook was mixed, with concerns about affordability and a fluctuating labor market making foreign investors more cautious. This caution has led to a noticeable dip in investment in New Zealand's luxury real estate sector.
Consumer confidence is another factor influencing the market. The Reserve Bank of New Zealand's focus on inflation has led to more cautious consumer spending. This caution is evident in the subdued sales activity and an increase in property listings, signaling a softening labor market and reduced consumer confidence. When people feel uncertain about the economy, they tend to cut back on luxury purchases, including high-end real estate.
Sources: CoreLogic NZ, ANZ, MPA Magazine, MoneyHub
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.