HOUSEHOLD BUDGETS AND HOUSING DEMAND
Budget 2025 introduces several changes that, while subtle, could impact household confidence and behaviour, particularly about savings and spending.
KiwiSaver incentives were pared back, halving the government contribution and targeting it at those earning less than $ 180,000 annually. At the same time, the minimum contributions for both employers and employees will rise to four per cent by 2028.
“ These changes shift more of the retirement saving burden onto households and businesses,” Olsen says, with Treasury forecasting slower wage growth as employers offset the cost of higher contributions.
For first-home buyers, these changes may reduce net household income growth, potentially moderating borrowing capacity. However, for seasoned investors or cash buyers, it could mean less competition in the entrylevel market and more acquisition opportunities.
Meanwhile, Olsen says that government support is becoming more targeted. Means-testing is now standard practice, from welfare to KiwiSaver to parental assistance, a trend that may continue in future budget programs. This approach signals a broader philosophical shift: households will need to rely on more than their own financial resilience, not the state.
WHAT TO EXPECT IN THE NEXT SIX MONTHS
While the Budget was cautious, it was not austere. Spending is still increasing, just more selectively.“ It’ s completely incorrect to call it austerity,” Olsen says. Instead, this represents a shift to more sustainable, prioritised public investment— a backdrop that lends itself to a slow but steady recovery.
In the housing market, we can expect:
• Gradually increasing buyer confidence as mortgage lending rates stabilise.
• Ongoing reprioritisation by sellers, particularly those seeking to offload non-performing assets or downsize in a tighter fiscal environment.
• Elevated investor interest, as more private capital is encouraged by government signals such as the‘ Investment Boost’.
• Continued supply constraints, which may keep upward pressure on prices, particularly in high-demand urban centres.
Overall, Budget 2025 reinforces a significant economic transition. As Olsen says,“ there aren’ t necessarily good choices available – just tough ones.” That reality is filtering into households and investor decision-making.
For New Zealand’ s residential property sector, the message is clear: with the government pulling back and private momentum taking the lead, the next chapter for real estate will be driven not by policy announcements, but by confidence, capital and timing.
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