NZ Property Market Sees Investor Comeback

After years of subdued activity, New Zealand’s property market is showing signs of revival, with investors returning as interest rates decline and cash flow improves. Falling house prices, cautious buyer sentiment, and recent policy changes are reshaping the landscape, creating both opportunities and challenges for first-home buyers and seasoned investors alike.

After two to three years of sluggish activity in the property investment space, property investors are returning to the market.

“In the last few years, after COVID-19, property prices went up too quickly,” Nathan Miglani from Squirrel explained. He said this was driven by ultra-low interest rates combined with a fear of missing out.

“Before 2022, there was a boom of property investors in 2020-21, purely driven by ultra-low interest rates, as low as 2.09 per cent and 2.19 per cent,” he added.

Over the past two to three years, during the period of sluggish growth, there was little capital growth and less meaningful returns for property investors.

After almost three and a half years, interest rates are now dropping, and they are falling quickly.

“The expectation is that interest rates will continue to fall for a good six to nine months,” Miglani shared. “We feel that this may be the bottom of the interest rates cycle – maybe at the beginning of a new year.”

He noted that the decline has helped investors with cash flow, with some reportedly saving between $700–$800 up to $1,000 a month because of lower interest rates.

Miglani also said that the return of property investors to the market would create slightly more competition for first-home buyers. Smaller-scale investors are targeting affordable properties, particularly in regions with lower entry costs, while the slowdown in price declines is making existing homes more attractive to investors.

This heightened demand for similar types of properties reduces availability and can make it more challenging for first-home buyers to secure a home.

“If you can afford it, this is the best time for first-home buyers to buy,” he advises.