Budget 2025: what it means for housing market dynamics in the months ahead
New CoreLogic Buyer Classification data from the first quarter of 2025 reveals a subtle but noticeable shift in market dynamics: a slight pullback by first home buyers( FHBs) and a renewed surge in investor activity, particularly among smaller, mortgaged investors.
Homeowners, prospective purchasers and investors are approaching the second half of 2025 with cautious optimism, following recent announcements by Finance Minister Nicola Willis in the government’ s Budget 2025.
Ray White New Zealand says the overarching tone of recent announcements reinforces the sense that while the broader economy is slowly stabilising, the onus of recovery has shifted squarely onto the shoulders of the private sector, particularly households and businesses, creating opportunity and burden in equal parts.
Chief executive and principal economist of economic consultancy Infometrics, Brad Olsen, recently dubbed it the‘ Switch-It’ budget, calling it a careful reallocation of spending that diverts resources to priority areas by trimming others.
“ There are few large new promises or spending programmes,” Olsen notes. Instead, Budget 2025 appears broadly defined by tough choices and a new normal of fiscal restraint, with the government stepping back as a key growth driver.
“ With the government stepping back as the key growth driver, the private sector, including the housing market, is now expected to carry the momentum for recovery.”
A TURNING POINT FOR THE MARKET
Following a prolonged period of interest rate hikes and inflationary pressure, the Reserve Bank of New Zealand( RBNZ) has signalled a pause in the tightening cycle, with room to consider rate cuts in 2026.
While Budget 2025 doesn’ t materially change the monetary policy outlook, its restrained stance on financial management provides reassurance to the central bank that inflationary pressures will remain in check. This dynamic supports a more stable lending environment in the near term.
“ Economic recovery is still expected in 2025 and into 2026,” Olsen says.“ But, at a more restrained pace than previously hoped for.” That restraint will likely keep mortgage lending rates steady or gently trending downward, a crucial factor for maintaining housing affordability.
As the cost of servicing debt continues to lessen, house hunters watching market dynamics may feel more confident re-entering the market. Sellers, meanwhile, will need to weigh the benefits of listing now, in a more predictable environment, versus waiting for broader price appreciation that typically takes longer to develop.
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