Waiting for the Turn: Why this Quiet Market is a Launchpad, not a Letdown

If the property market feels a little dull right now, that’s because it is, and that’s precisely why it’s interesting.

Welcome to mid-2025: a moment of economic pause that’s not quite a downturn, not quite a rebound, but something else entirely. The headlines are flat, confidence is cautious, and most people are waiting to see who moves first.

But here’s the thing: in real estate, quiet markets are never just quiet, they’re always loading or unloading. Like a spring held under tension, today’s steady, underwhelming performance may be laying the groundwork for a dynamic period ahead. For investors with capital, patience, and strategy, this may be the best moment to enter, not exit, the market.

Let’s explore why.

Residential: Inventory High, Pressure Low, Conditions Primed

On the face of it, the residential market looks indecisive. Prices are edging up ever so slowly, the seasonally adjusted REINZ House Price Index rose just 0.1% in May, marking seven consecutive months of very marginal gains. Total growth since the trough in late 2024 is just 1.3% (ANZ Property Focus, June 2025).

But look deeper and you’ll find the signs of a base forming:

• Sales volumes have stabilized at long-run averages
• The sales to listings ratio is tracking pretty much sideways, indicating supply is keeping pace with modest demand.
• Median days to sell (currently at 46) remain above the long-term average of 39 – meaning buyer power is high, but urgency is low.

What does all that mean? It means pressure, both upward and downward, is unusually low. That’s not stagnation; it’s a tension coil. These are conditions we’ve seen before. They mirror the post-Global Financial Crisis (GFC) phase around 2009-2011.

After the GFC, NZ house prices fell around 10%, and sales volumes halved. But by 2010, even as confidence remained soft, prices and volumes began lifting quietly. Investors who bought in that “flatline” phase were rewarded as the market gathered momentum into 2012–2014, long before the headlines turned bullish.

That’s what we’re seeing now. The consensus across analysts and banks on house price gains is broadly aligned, modest price growth in 2025 (2-4%) and stronger gains in 2026 (5-6%)

Short-term mortgage rates are already falling – the 1-year fixed rate sits around 4.89%, and the Official Cash Rate is projected to fall to 2.5% by early 2026. But interest rates don’t need to collapse and go ‘rock bottom’ for confidence to return, they just need to stop rising. We’re there now.

Commercial Property: Slow Confidence, Steady Income, Strong Foundations

The commercial sector is also experiencing a low-pressure environment, but not one devoid of opportunity. New Zealand’s industrial property market continues to lead the way, with vacancy rates still tight in key hubs like Auckland and Christchurch. Long-leased logistics, cool storage, and manufacturing assets remain in demand, supported by resilient tenant fundamentals.

Meanwhile, specialty assets, particularly in the healthcare, childcare, and agribusiness-aligned industrial space, are attracting steady investor interest. These assets offer relatively secure income streams with CPI-linked leases and low obsolescence and exposure to consumer discretionary spending cycles.

The office sector, especially secondary and fringe-CBD assets, has been more challenged. However, anecdotal leasing activity is showing signs of improvement, and prime assets with a modern fit out and strong tenant profiles are slowly attracting buyers, often at adjusted pricing.

Buyers are being cautious, as are lenders, but deals are happening. Conservative lending criteria mean high-quality, income-producing assets are now the focus. In other words, the market is active, just selectively. Investor sentiment is quiet, but forward-looking. Future OCR cuts expected through the remainder of 2025 will eventually compress yields and boost asset values again, especially where there is strong rental growth built into leases.

Yes, Things Are Still Tough – But That’s Why the Turn Matters

Let’s be clear: New Zealand’s economy isn’t surging, far from it. Households are still grappling with a high cost of living. While inflation has fallen to 2.7% (Stats NZ, June 2025), non-tradeables inflation that covers essentials like rent, rates, insurance and utilities, is still high at 3.7%. These are the things Kiwis can’t cut back on, and they’re still biting. Unemployment has climbed to 5.1%, up from 4.0% a year ago. Many industries are seeing restructures, job cuts, and weaker hiring demand.

But in real estate and investing more broadly, you rarely get the best buying conditions when the economy feels good. Recovery signs often appear before confidence returns. And right now, many of those signs are forming; interest rates are falling, inflation is within target, export prices are rising, capex intentions are lifting, to name a few.

Why Property Moves First: History Repeats

This tendency for property to move ahead of the wider economy is not just theory, it’s proven history.

We saw it after the GFC, when prices began recovering in 2010 even though the labour market and GDP growth were still subdued.

We saw it again post-COVID: in late 2020, REINZ house prices began surging – up 8.2% year-on-year by December, while GDP had only just started recovering from a record -11% plunge in Q2. Property markets moved quickly in response to falling interest rates and cheap credit, well before consumer confidence returned.

And in the Canterbury earthquake recovery, property values in Christchurch began climbing in 2012, ahead of the wider regional and national rebuild momentum. By 2014, Christchurch prices had outpaced national averages by a wide margin, led by property demand, not lagging it.

Each time, property reacted to conditions such as falling rates, rising liquidity, or future supply constraints, not to backward-looking economic data. That’s what makes it a leading indicator.

Conclusion: The Best Markets Are Built in Boredom

Markets don’t send invitations. They whisper before they roar. Investors who wait for confidence to return will likely pay a premium for re-entry. Those who act during the quiet phase — when vendors are flexible, are the ones who build resilient portfolios.

This is not a hype cycle. It’s not a crash. It’s a pause, a recalibration. And history tells us that boredom is often where the best investments are made. In the years following the GFC, those who bought in a low-pressure market did very well. The same played out post-COVID. Today’s environment, characterised by soft data, high listings, stable yields, and falling interest rates, looks strikingly similar.

If you’re waiting for a bell to ring, it won’t. But if you listen carefully, the market is already whispering: buy well, and buy now.