There were no surprises in Budget 2025 for the housing market. In fact, Finance Minister Nicola Willis made little reference to housing in her speech to Parliament.
However, the Budget’s Economic and Fiscal Update tipped house prices would rebound with 5.6% growth by next year.
The update noted the housing market had started to stabilise after prices weakened through 2024, amid rising listings and modest sales.
Recent months have seen slight price rises alongside increased market activity, according to the update. As lower interest rates feed through and the labour market strengthened (from mid-2025), annual house-price growth was forecast to rise from 0.3% in June 2025 to 5.6% in June 2026, before easing to 5.3% by June 2029.
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Finance Minister Nicola Willis delivers the Budget as Prime Minister Christopher Luxon looks on. Photo / Getty Images
What did Willis announce?
Willis mentioned housing in relation to KiwiSaver changes, indicating first-home buyers would benefit – although the changes also include a halving of the Government’s annual contribution of up to $521 to a maximum of only $260.72.
The changes will see the default contribution rate moving to 4% but with a 3% option retained, as recommended by the Retirement Commissioner last year, Willis said.
And from April 1 next year, employer matching would be extended to 16- and 17-year-olds, and from July this year, they would be eligible for the Government contribution.
“This will encourage more young people to adopt a savings habit and help them build a deposit for their first home,” said Willis.
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Labour leader Chris Hipkins, however, said that an 18-year-old would be $66,000 worse off at retirement as a result of the changes. "Jobs, health, and homes should be the priority for this Budget, and it simply wasn't," Hipkins said.
In a separate announcement, Housing Minister Chris Bishop and Associate Housing Minister Tama Potaka said there was $128m of new funding over four years for social housing, saying the money would deliver at least 550 more social houses in Auckland in the 2025/2026 year, on top of 1500 new social homes funded through last year’s Budget, which were to be delivered from July this year.
A further $82m was being committed for Upfront Operating Supplement payments for community housing providers in certain circumstances, and the Government was establishing Crown lending facilities of up to $150m for the Community Housing Funding Agency “to help lower the cost of borrowing for community housing providers”.
The Government was establishing a new contestable Flexible Fund, which would replace previous housing programmes, consisting of $41m operating funding over four years and $250m capital funding over 10 years for additional houses from July 2027.
Foreign buyer ban - will it be overturned?
There was no mention of a change in approach to overseas buyers, something high-end real estate agents have been wanting since the foreign buyer ban was introduced by Labour back in 2018.
The ban was briefly discussed on Mike Hosking’s Newstalk ZB show this week, with Prime Minister Christopher Luxon saying he was in favour of raising the threshold at which people from overseas could buy an existing New Zealand home. Deputy Prime Minister Winston Peters hinted that while there would be no announcement in the Budget, it would not be too long before there was an announcement.
There have been hints that the Government will overturn the foreign buyer ban for houses at the upper end of the market. Photo / Getty Images
OneRoof reported last week that some agents said they had heard from politicians the ban was about to be lifted, but one of those fingered as a source, the Act Party Leader David Seymour, squashed that, saying it was news to him.
He said he was often asked about the issue, “however, every time I’ve been asked, I’ve told them there is no decision I’m aware of and that it’s wrong to speculate unless you know something I don’t.”
Winston Peters’ office did not respond to OneRoof questions at that time.
Budget 2025 - what do the experts think?
OneRoof asked several housing experts for their reaction to the Budget. Most dismissed it as having anything that would impact the property market and instead felt that next week’s Reserve Bank OCR decision would be more consequential.
KiwiBank chief economist Jarrod Kerr thinks the big news for homeowners will come when the Reserve Bank gives its Monetary Policy Statement on Wednesday.
“We are looking to next week already,” he told OneRoof.
He hopes the Reserve Bank will make some bold cuts to the Official Cash Rate, which currently sits at 3.5%. The Reserve Bank has signalled two consecutive cuts of 25 basis points are on its way, but Kerr urged it to make one bigger cut of 50 basis points on Wednesday.
KiwiBank chief economist Jarrod Kerr wants the Reserve Bank to make big cuts to the OCR. Photo / Supplied
“We are not seeing a lift in investor activity. We need lower rates for that to happen. We are at a point now where a cut of 25 basis points is just mucking around. We are not here to muck around.”
Kerr also touched on Willis's announcements around KiwiSaver. He supported the move to get people to contribute more, but he did not think that the changes would make a huge difference. “You get that once a year. It’s not going to make or break your deposit.”
Ray White New Zealand chief executive Daniel Coulson said there was nothing dramatic in today’s Budget, and like Kerr, he was looking ahead to next week’s OCR announcement.
“When the OCR went down 50 basis points, we did see a significant uplift in buyer activity. But for almost all of the subsequent reductions, there hasn’t been a noticeable reaction other than it’s probably given people more confidence in the direction of travel.”
He also wondered whether there was more assistance coming for first home buyers. “The one thing that was interesting about what the Finance Minister said was that they do want to support people into first homes, so not to sort of speculate or read too much into that comment, does that indicate there might be something in the future? Not sure.”
New Zealand Sotheby’s International Realty managing director Mark Harris described the Budget as “pretty vanilla”, but he wasn't unhappy with it.
“I think fiscal responsibility adds confidence in its own way so I’m not upset with it.”
Harris, who has previously championed a lift in the foreign buyer ban, noted nothing had changed there, but then had not been expecting it in the Budget.
He also applauded the introduction of the new tax incentive Investment Boost aimed at increasing capital investment in New Zealand by allowing a business to immediately deduct 20 percent of the cost of a new asset from its taxable income, on top of depreciation.
Harris said it would be a good boost for businesses like his. “We can go and invest in a new office in Auckland, as an example, and we can get a deduction on that, then that helps us grow our business, but it also helps people being employed, so I think it is positive.”
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* Additional reporting by Nikki Preston
