Home Loan Outlook: Unemployment Trends and a Stable Property Market

Topic #1:  Good Returns 29th of July - Flatter prices in a well- balanced market

Topic #2: Stuff 7th of August - Auckland house price average falls below $1m for first time in nearly a year, Trade Me report says

Topic #3: RNZ 5th of August - Here's what unemployment data means for your home loan

Topic #4: Oneroof 6th of August - Tony Alexander: Banks aren’t cutting rates because sunny days are around the corner

Topic #5: Stuff 6th of August - Students face rising rents despite more properties on offer in university towns

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Transcript

 Hi everyone. I'm Debbie Roberts, owner and financial advisor at Property Apprentice. Join us today for the "week in review" where I talk about current events for the everyday investor and home buyer. Our topics for this week,  📍 first up from good returns on the 29th of July, flatter prices in a well balanced market.

Topic number two from Stuff on the  📍 7th of August, Auckland House price average falls below $1 million for the first time in nearly a year- trade Me Report says. Topic number three, from  📍 RNZ on the 5th of August. Here's what unemployment data means for your home loan. Fourth topic from Oneroof. On the  📍 6th of August, Tony Alexander: Banks aren't cutting rates because sunny days are around the corner.

Topic number five,  📍 from realestate.co nz on the 6th of August, students face rising rents despite more properties on offer in university towns. So first up for this we can review and all the links to these articles are in the show notes below.

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 Good returns on the 29th of July. Flatter prices in a well-balanced market.

Reserve Bank of New Zealand, RBNZ data shows a clear shift in borrower preference towards one year fixed mortgage terms, particularly among investors. In June, 44% of the $2.4 billion linked to investors was on one year fixed terms. A notable increase from the previous month when many preferred floating rates lending to investors, however, dipped slightly from $2.5 billion in May to $2.4 billion.

Owner-occupiers also lean towards one year terms with 39% of their $6.1 billion in mortgage borrowing fixed for 12 months. That's up from 33.4% in May. Still total lending to this group also declined from $6.4 billion the previous month. This shift followed the Rbn Z's official cash rate cut in May from 3.5% down to 3.25% with further expectations of reductions in the coming months.

Some economists suggest that the OCR may need to drop below 2.5% of the economic outlook continues to weaken. Total new residential mortgage lending fell from $9 billion in May to $8.7 billion in June, though it was significantly higher than the $5.5 billion recorded in June last year, an annual increase of 57.4%.

The preference for fixed interest rates continues to grow, making up 74.5% of new lending. That's up 2.8 percentage points from May. Floating rate lending dropped for both groups down from 37.3% to 25.6% for investors, and from 31.6% down to 24.7% for own occupiers. By term, 95.6% of investor lending and a similar majority of owner occupied lending was fixed for two years or less.

Two year fixed loans for Owner-occupiers fell notably from 18.8% in May to 11.9% in June. In the commercial property sector, lending trends varied. Investment property lending rose by $77 million. That's up 9.6% to $883 million. Commercial development lending dropped by 21.6% to $156 million and residential property development increased by 25.7%, reaching $132 million.

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Topic number two from Stuff on the 7th of August. Auckland house price average falls below $1 million for the first time in nearly a year. Trademe report says. Auckland's average house prices dipped below the $1 million mark for the first time in nearly a year. According to Trade me's latest property pulse report, and it could remain there longer than previously seen.

In July, the city's average asking price fell to $989,250, which is a drop of 1.7% or nearly $17,000 from June.

This is the lowest level since September, 2024, and a notable decline from March's figure of $1,057,300. Trade Me property customer director Gavin Lloyd noted that the timing of the drop is significant. Unlike last year when prices fell below $1 million for just two months, this year's early decline suggests prices may remain under that threshold for longer, presenting more opportunities for buyers.

Nationwide, the average asking price also declined slightly . Listing stayed steady while buyer demand rose 3%. Marlborough saw the steepest price drop down 6.2% to $668,450, while Southland recorded the largest gain with prices up 5.3% to $520,250. With prices easing in a healthy supply of listings

lloyd said that the current market provides favorable conditions for buyers, allowing more time for due diligence and confident decision making. I think when you're looking at averages, you should always bear in mind that if there's lower value properties that have been selling like townhouses, for example, then that will drag the average down.

So you should always look at what properties have been selling in the market, in the area that you are looking at purchasing in.

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 Topic number three from RNZ on the 5th of August. Here's what unemployment data means for your home loan. New Zealand's unemployment rate has reached its highest level since 2020.

Prompting speculation that more OCR cuts may be on the horizon. Stats New Zealand reported the unemployment rate rose to 5.2% in the June quarter. That's up from 5.1% previously. While the increase was slightly below forecasts, economists noted it still reflected substantial spare capacity in the economy enough to help keep inflation subdued.

According to ANZ economists, businesses may begin to reduce their hoarded labor in the months ahead. Some firms have reportedly retained staff in anticipation of an economic rebound, which is where the term hoarded labor comes from, and that may not materialize as expected. Without a strong recovery, those positions could therefore be at risk

now. ANZ added that this situation supports the case for the Reserve Bank to give more weight to indicators showing weak inflationary pressure with no apparent barrier to an OCR cut in August. ASB economists echoed the sentiment suggesting that the data supports further rate cuts. They forecast a 25 basis point cut in August and anticipate the OCR could drop below 3% by year end if labor market weakness persists.

BNZ's Chief Economist pointed out that while the unemployment rate was slightly better than predicted, this was largely due to a decline in the labor force participation rate, which fell to 70.5% fewer people seeking work isn't a positive sign, and he described the labor market as weaker than the reserve bank's previous expectations.

Combined with sluggish economic indicators, this reinforces the need for more monetary support. Kiwibank's chief economist maintained his view that monetary policy should remain stimulatory. He emphasized that the apparent improvement in the unemployment rate was due to younger workers leaving the workforce not genuine gains.

Rising under utilization and a drop in hours worked suggests that GDP may contract again this quarter, signaling an economy still struggling to recover from recession. Whether OCR cuts will lead to lower mortgage rates remain to be seen. Some economists believe mortgage rates are close to bottoming out, but there could still be room for small reductions, especially in short term fixed rates.

With overseas rates also trending downward, this could open the door to further modest declines. One of the things that I think is important to remember is that the property market does tend to start showing signs of recovery before the economy actually starts to move, and certainly before the unemployment rate improves as people get a bit more confidence.

  📍  📍 If you'd like to learn more about investing in property, join me at one of our free events called How to Succeed With Property Investing. I'll discuss strategies for successful investing from my perspective as an experienced investor and financial advisor, and all of our free events are available live and online.

Check out www.propertyapprentice.co.nz for upcoming dates and register for one today. We don't sell property. So it's all about increasing your knowledge to reduce your risk.  And if   📍  📍 you've already been to one of our free events and would like to find out more about how we can help you to reach your financial goals, you can also book a no obligation phone call or meeting with my husband Paul Roberts via the website.

That's www.propertyapprentice.co.nz  

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Topic number four, from Oneroof on the 6th of August, Tony Alexander. Banks aren't cutting rates because sunny days are around the corner. Interest rate changes typically take 18 to 24 months to fully influence the economy, inflation, and business activity according to Alexander.

The first easing of monetary policy in this cycle began about a year ago, but the economic data shows little immediate improvement, something that's expected during this lag period. A clearer shift in economic , consumer confidence and spending is anticipated by the first half of 2026. Leading indicators may already be stabilizing as seen in recent monthly surveys.

In a real estate survey with New Zealand Home Loans, only 11% of agents reported seeing buyers act out of a fear of missing out or fomo, and that's a notable increase from 9% last month and 5% two months ago, though still well below the five year average of 30% and the pandemic peak . Likewise, the number of people attending open homes is beginning to recover with a net 8% increase this month compared to negative 4% in the previous survey.

However, demand from property investors does seem to be waning in some areas. A mortgage advisor survey with www.mortgages.co.nz revealed that a net 3% of brokers are seeing fewer investors down from a net 21% reporting more investors last month. This is the weakest investor sentiment since mid 2023.

The Reserve Bank's rate cut signals concern not optimism. Rate reductions typically occur in response to worsening conditions and weak inflation, not because of strong growth expectations. For businesses, this means challenges remain. Cost pressures are still difficult to pass on to customers, and the housing market continues to favor buyers.

Unemployment also rose to 5.2% in the June quarter, which is the highest level since 2020 as mentioned previously and since employment trends lag behind economic growth, job gains and reduced layoffs are more likely to occur once the economy starts to show more consistent expansion. Again, a likely scenario for 2026 for Tony Alexander.

So our thoughts on this, are we are certainly seeing an increase in activity from experienced investors. We have noticed that new investors are a bit more hesitant about the market, but they're starting to come to the, come to the op, you know, realization that prices can't stay low like this for much longer.

And, so we are certainly starting to see increasing interest across the board there. 

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Topic number five on the 6th of August, students face rising rents despite more properties on offer in university towns. New rental market data from www.realestate.co.nz reveals a sharp increase in rental listings across New Zealand.

With university cities seeing the biggest shifts, they're not always with cheaper prices. In July 7,105, new rental listings were recorded nationwide marking a 16.2% increase compared to the same period last year. Despite the jump in supply, the national average rent held steady at $638 a week. That's down just 1.7% year on year.

Dunedin City stood out with a 66.2% increase in available rentals, yet the average rent climbed 12.2% to $709 a week. This suggests demand in the student heavy city remains strong. Hamilton City also saw a 17.9% increase in listings but didn't experience a similar rent hike. www.realestate.co.nz Spokesperson, Vanessa Williams noted that while supply is growing in some regions, rental prices are still being driven by solid tenant demand in those areas, particularly in cities with large student populations.

She highlighted that affordability remains an issue for many renters, even with more options available, other major cities showed a more balanced trend. In Wellington City where listings rose sharply, the average rent dropped 14.6% to $602 a week. That's the largest decline recorded. Christchurch rents fell 3.2%, $650.

Palmerston North dropped 2.3% to $561, and Auckland dipped 2.8% to $687. Williams said Wellington's declining rents may indicate landlords are adjusting to prices to stay competitive in a market where renters have more choice. Overall, the data suggests that while supply is growing across the country, rental demand remains high, keeping prices relatively steady in many areas.

Whether that balance continues will depend on how market dynamics evolve over the coming months. I wonder this, this is just my personal thoughts on this. I wonder how much of the increasing rents in the student accommodation area is because with the lack of jobs available, more people might be looking at going back to university to continue study or upskill in some areas.

So yeah, it's always, , important to also remember that even though we've had rents come down, prices have fallen in a lot of areas as well, which means that for anyone that's looking at. Purchasing an investment property. The rental returns are actually a lot higher at the moment than we've seen in a long time.

With rent shifting, house prices softening in key areas like Auckland and Wellington, and more listings becoming available nationwide. Now's the perfect time to arm yourself with the right knowledge.   📍  📍 Join us at one of our free events called How to Succeed With Property Investing. These events are all available online so you can gain valuable insights and strategies tailored to today's market conditions regardless of where you live.

Whether you're an experienced investor or just getting started, this free session will equip you with the key tools and insights to make confident, informed decisions. Don't miss out. Register today and take the next step towards achieving your financial goals. In our free events, I'll also tell you more about how we could help you if you were a client to achieve your investing goals.

So if you're interested in finding out more about how we could help you, www.propertyapprentice.co.nz and register for one of our free events today. If you've   📍  📍 already been to one recently and you'd like to know more about how we can help you on your journey, you can also book a no obligation phone call or meeting with my husband, Paul Roberts.

Also at no charge through our website, www.propertyapprentice.co.nz.  Thanks for listening. 

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