Market Momentum: Why the Second Half of 2025 Matters
While some are waiting for the market to change, others have already adjusted their position – and right now in South Auckland, we’re seeing sellers begin to reclaim control.
Following a challenging period for Kiwi households and the economy, marked by recession, high borrowing costs, and subdued sentiment, positive momentum is building. In recent months, we’ve seen a meaningful shift in activity levels, affordability, and buyer engagement. It’s increasingly clear that the second half of the year may look quite different from the first.
Across the Ray White network, including our offices in Manukau, Manurewa, Mangere, and Mangere Bridge, we’ve recorded steady month-on-month gains in sales volumes – a signal that confidence is returning. In May alone, our team listed 2,004 properties, slightly more than the same time last year, although down from April’s elevated total. This reflects a return to seasonality, and more importantly, signals an inflection point for sellers: competition from new stock is easing, and fresh listings are commanding the most buyer attention.
Interest Rates and Market Dynamics
Interest rate movements continue to drive buyer sentiment. The Reserve Bank’s recent 25-basis-point cut to the Official Cash Rate (OCR), bringing it to 3.25%, marks the sixth consecutive easing since August 2024.
While the RBNZ remains cautious, its own forecast now points to a base rate of 2.85% by early 2026, with markets pricing in the possibility of 2.50% as early as October this year. For buyers, this signals that mortgage rates could ease further in coming months – not dramatically, but enough to make a difference.
South Auckland buyers are already feeling the impact. Homeowners refinancing today at an average two-year rate of 5.05% on a $700,000 home (with a 20% deposit) are saving around $719 per month compared to peak rates above 7% in late 2023. That puts more money in buyers’ pockets – and gives sellers access to a more confident pool of buyers.
Economic Policy Supporting Activity
Also contributing to market momentum is a new 20% upfront tax deduction for business asset purchases. This could unlock equity for South Auckland’s many small business owners, who often use their homes as loan security. The result? Increased confidence, improved cash flow, and potential stimulus for housing demand.
Other economic indicators are also encouraging. Export prices – particularly dairy – are up, supporting regional economies and spurring interest in rural and lifestyle properties. Meanwhile, reforms aimed at streamlining the building consent process (including a new private consent authority) are set to reduce regulatory bottlenecks in the construction sector.
Challenges Persist, But Opportunity is Rising
It’s not all smooth sailing. Global risks, sticky inflation, and softened growth forecasts still cast a shadow. At home, Kiwis are watching job security, borrowing conditions, and asset values carefully. Buyers are more informed and strategic than ever – they know what they want, and they’re willing to wait for the right fit.
Still, many of the metrics that matter are turning more favourable. As Ray White New Zealand Chief Executive Daniel Coulson notes:
“With half the year now behind us, the data reveals a market quietly shifting underfoot. Volumes are rising, listings are tightening, and the cost of borrowing is easing - albeit with a central bank reluctant to move too fast. This sets the stage for a deliberate reset, and therein lies the opportunity.”
The Game of Two Halves
Coulson believes we’re entering a new phase of the market: the first half was about stabilisation, the second could offer renewed momentum.
Buyers are stepping off the sidelines, lured by improved lending conditions and affordability. While global headlines echo caution, local data suggests reason for optimism.
Less Competition, More Cut-Through
In a high-inventory environment, it’s the new listings that stand out. Sellers now face less competition from fresh stock, giving them a tactical edge.
Buyers perceive new listings differently from those that have been sitting for weeks,” says Coulson. “Inventory may be high overall, but fatigued listings aren’t your competition – fresh stock is.”
Buyer Confidence is Returning
As affordability improves, buyer engagement increases. Many are leveraging better rates, greater flexibility, and stronger negotiating power. These aren’t just browsers – they’re ready to transact.
Banks, too, are showing more flexibility with non-standard borrowers – those with variable incomes or lower deposits are finding more doors open.
Green Shoots in the Economy
Export prices are up. Home insurance costs are softening. Inflation is tracking within target. With the OCR at 3.25%, further cuts are possible – though not guaranteed. All signs point to a more favourable lending environment, especially for interest-sensitive sectors like housing and construction.
But as Coulson warns:
“Markets don’t flash a neon sign when they bottom out. Waiting for perfect conditions can mean missing the moment. When confidence returns en masse, sellers face stiffer competition.”
The Investor Mindset is Shifting
Investor lending is up more than 7% annually – compared to just under 5% for owner-occupiers. Yields are improving slightly, with lower interest rates, stable rents, and modest capital gains creating more appealing conditions for long-term investors.
Unlocking Capital, Lifestyle, and Growth
Recent tax incentives and streamlined consent processes are unlocking more than capital – they’re unlocking confidence. Coulson explains:
“Many small business owners use their home to secure business lending. With stronger business cash flow, those owners can upgrade or invest – especially in regions where entrepreneurship drives the economy.”
A Market Rewarding the Brave (and Informed)
The second half of 2025 is shaping up to reward those who act strategically. Sellers now have access to a buyer pool that’s stronger, savvier, and more financially prepared than 12 months ago.
“The direction of travel is subtle – but it’s real,” says Coulson. “Those willing to move with it now are likely to benefit the most.”
Whether you’re buying, selling, or staying informed – understanding where the market is heading (and why) is essential. The second half of this year may not be defined by headlines or hype, but by smart moves, well-timed decisions, and the confidence to act before the crowd.
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