Is it a good time to invest in NZ property?

At first glance, the market appears stagnant. As Kelvin points out, the numbers don't exactly scream "buy." He notes that "national median values are only up by 0.6% over the first half of 2025."

He puts this into a longer-term perspective for us. After a significant drop from the peak in early 2022, "values have only edged up by a total of 2.6%," he explains. "The average capital gain in the past few years has been minimal."

Despite this, Cotality's Buyer Classification data shows a clear trend. "Mortgaged multiple property owners, including investors, have raised their share of purchases from 21% a year ago to 24% now," says Kelvin. While this is just shy of the long-term average, it's a significant uptick. So, what’s tempting them back into the market?

According to Kelvin, several recent changes have tipped the scales in favour of property investment. He points out that "the Brightline Test is back to two years, lending rules only require a 30% deposit rather than 40%... and of course full mortgage interest deductibility is back."

However, Kelvin believes the single most significant factor is the drop in borrowing costs. "In my view the most important change has simply been the fall in mortgage rates themselves," he states. This has a direct impact on an investor's weekly budget. He calculates that this has reduced "the cashflow top-up typically required on a rental property purchase from perhaps $400-$500 per week... last year to maybe $200 now – still hefty, but more comfortable for a larger number of households."

It's not all smooth sailing, and savvy investors are proceeding with caution. On the other side of the ledger, Kelvin highlights several challenges.

He notes that rental growth has "faded to zero," a trend consistent with a high supply of available rentals and slowing demand as net migration eases. At the same time, "costs continue to go up, including council rates."

There's also the element of political uncertainty. Kelvin says that "some investors are also wary of the political risk... that a future Labour-led Government may well take interest deductibility away again."

Looking further ahead, he identifies longer-term concerns that might temper expectations. "I’d also highlight a longer-term factor... which is the possibility that capital gains in future are lower than in the past," he suggests. A combination of potential tax changes, a government push for more housing supply, and the fact that "the long-term downwards trend in interest rates can’t be repeated" could all reshape the investment landscape.

Finally, he adds a crucial new piece to the puzzle: the official Debt-to-Income (DTI) ratio rules. "These may well make it more difficult for investors to grow a portfolio at the same speed as before," Kelvin cautions, though he reminds us that new builds remain exempt.