Rent vs. Buy in 2025: Why “Cheaper Now” Could Cost You More Later

Topic #1:  Good Returns 26th of November- OCR Cut: What the RBNZ said

Topic #2: RNZ 26th of November - Is it cheaper to pay a mortgage, or rent?

Topic #3: TradeMe 28th of November- OCR predictions for 2026 & 2027

Topic #4: RNZ 26th of November - The rising cost of taking a gamble on the what-ifs

Topic #5: NZ Herald 24th of November - KiwiSaver 12% plan risks backfiring without total pay ban, provider warns

#PropertyApprentice #NZProperty #RentVsBuy #FirstHomeBuyerNZ #FinancialFreedom #RNZ #PropertyInvestmentNZ #PaulAndDebbieRoberts

Chapters

• 0:59 Topic #1: Good Returns 26th of November- OCR Cut: What the RBNZ said
• 6:01 Topic #3: TradeMe 28th of November- OCR predictions for 2026 & 2027

Transcript

 Hi everyone. I'm Debbie Roberts, owner and financial adviser 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, number one, from the  📍 Good Returns on 26th of November OCR cut what the RBNZ said. Topic number two from the  📍 26th of November on RNZ.

Is it cheaper to pay a mortgage or rent? Topic number three from  📍 Trade Me on the 28th of November, OCR predictions for 2026 and 2027. Topic number four, from  📍 RNZ on the 26th of November. The rising cost of taking a gamble on the what ifs. And topic number five for this week in review from the  📍 New Zealand Herald on the 24th of November, Kiwi save a 12% plan risks backfiring without total pay ban provider

warns.  

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So first up for this week in review from Good Returns on the 26th of November, OCR cut what the R-B-N-Z said. In its final decision of the year, the reserve bank voted five to one to reduce the official cash rate. The OCR by 25 basis points down to 2.25%. While annual consumer price inflation reached the upper limit of the target band at 3% in the September quarter, driven by high food energy and council costs, the committee expects this to fall to around 2% by mid 2026.

This projection supported by declining non tradables inflation and significant spare capacity within the economy. Economic activity was sluggish in mid 2025, highlighted by a 0.9% GDP decline in the June quarter. Though the committee noted this figure likely exaggerated the true extent of the weakness.

However, a recovery appears to be underway. Lower interest rates are beginning to encourage household spending, and the labor market is showing early signs of stabilizing with a rise in job vacancies. While outward migration has been high, particularly to Australia, it is expected to slow as the domestic economy strengthens financial conditions continue to ease with wholesale interest rates and the New Zealand dollar both declining.

Especially for the short term rates. For the wholesale interest rates, the average mortgage yield has dropped to 5.4% and is projected to fall further to 4.7% by September 2026 given that nearly 40% of fixed rate mortgages are due to rep reprice shortly. Despite these lower borrowing costs, house prices remain stable.

The committee expects future housing growth to be moderate and aligned with income growth, noting that easing loan to value restrictions or LVR restrictions is unlikely to spike prices due to existing debt-to-income limits or DTIs. Gobally, economic growth has been supported by investment in artificial intelligence, but it is predicted to slow modestly in 2026 as trade barriers impact activity.

The Reserve Bank views the risks to the inflation outlook is balanced. While a faster recovery and demand or rapid margin restoration by businesses could push inflation up, continued caution from households could slow the recovery down. The committee concluded that the rate cut would help support confidence with future moves dependent on the evolving economic outlook, but they're not predicting big cuts in the future, if any.

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Topic number two from RNZ on the 26th of November. Is it cheaper to pay a mortgage or rent? ANZ economist  Matt Galt has analyzed the financial trade off between renting and owning, noting that the relationship between these costs is a primary driver of house prices. He explained that the market gravitates towards a balance between rental costs and the running costs of home ownership, such as interest rates, council rates, and insurance.

When ownership costs are low compared to rent demand from investors and owner-occupier increases driving prices up. Conversely, when ownership costs are high relative to rent, house prices face downward pressure. To compare these costs, Galt used a model based on a home loan with a 50% loan to value ratio or LVR on a five year fixed rate, including buffers for maintenance and other expenses.

He noted that while new buyers usually start with higher costs due to larger mortgages, the cost of owning versus renting typically equalizes once the loan reduces to about 50% of the property's value. As an example, he pointed out then that an Auckland buyer with a 20% deposit on a median home pays significantly more per week than the median rent.

Whereas a buyer with a much smaller mortgage would pay less than the cost of renting. Galt observed that the market has returned to a historical balance following the 2019 to 2021 period where low ownership costs fueled a buying frenzy and the 2022 to 24 period where high rates made owning more expensive than renting.

He explained that recent drops in interest rates have lowered ownership costs, although this has been partially offset by rising council rates and insurance, as well as slightly decreasing rents. He added the interest remains the dominant cost variable, and its recent decline has helped close the gap between renting and buying.

Looking forward ANZ forecasts that ownership costs and rents will remain in balance over the next few years, suggesting broad stability for house prices with potential for modest growth as the economy recovers. Galt indicated that interest rates were expected to stay relatively low for some time, with only a potential slight tick upwards towards the end of 2026.

Furthermore, he noted that while council rates are increasing, the pace of those hikes is expected to ease from previous highs. My thoughts on this are and always have been, that you should get your foot on the property ladder as soon as possible because over time you will pay that mortgage down and, by the time you reach retirement age, you could be mortgage free on your home, which means that the rates and the insurance for owning that property and repairs and maintenance is likely to be significantly lower than what annual, what weekly rent could be at that same time.

Because rents do tend to increase over time, whereas mortgages, especially on principal and interest, tend to reduce the loan balance over time. Okay. 

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So third topic for this week in review from Trade Me on the 28th of November OCR predictions for 2026 and 2027. So strap in, we're gonna look at some crystal ball gazing. Following the Reserve Bank's final cut for 2025 in November

forecast suggests that the official cash rate the OCR may have reached the bottom of its cycle at 2.25%. The Reserve Bank indicate a 20% chance of one final cut by June 2026, but its primary prediction is for the rate to remain unchanged throughout next year before gradually rising to between 2.75 and 3% through 2027 and 2028.

The bank noted that future moves remain dependent on data. Rising unemployment could prompt further cuts while inflation exceeding 3% could trigger faster increases. Major bank economists offer varying perspectives on the paths ahead. Kiwibank economists maintain there's a 50-50 chance of another cut in February viewing the risk as tilted towards further reductions.

Conversely, ANZ believes the OCR will not be cut again unless economic data is weaker than anticipated. Suggesting that better than an better than expected GDP figures could bring rate heights closer. BNZ experts argue against significant further easing, noting that inflationary pressures persist and current settings are already stimulatory.

Westpac views the November cut as the end of the easing cycle, predicting a wait and see period with a potential first hike in December 2026. ASBs forecast also holds the rate at 2.25%, though they acknowledge scope for slight easing of data disappoints. With the consensus indicating that the OCR will stay flat in 2026 before rising in 2027, interest rates are likely near the lowest point.

While variable rates have fallen and short-term rates may see slight fluctuations, long-term rates could soon begin to increase. ANZ suggested that with little difference between one and five year rates, borrowers should consider the longer term such as two or three years to balance cost and certainty.

Experts caution that forecasts are not guarantees and events can shift rapidly. However, given that rates are unlikely to drop significantly lower, many advisors suggest fixing for two years or more is worth considering. The general recommendation is to seek professional advice and consider splitting a mortgage across different terms, different expiry dates to spread your risk according to individual financial comfort.

My thoughts on this, and obviously this will depend on your individual financial position, but with the five year rates, many banks are offering below 5% interest rates at the moment, and that's extremely competitive. And also historically low levels when we exclude the period during COVID when interest rates in the OCR was slashed.

So my thoughts are that there's a good chance that the long-term interest rates have absolutely passed the bottom of this cycle. So it's worth looking at, fixing for those five year rates, locks some certainty in unless you're thinking of selling or anything like that in the near future so talk to your mortgage adviser

  📍  📍 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 a financial adviser and all of our free events are available live and online.

Go to www.propertyapprentice.co.nz for upcoming dates and register 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 you'd like to find out more about how we can help you to reach your financial goals, go ahead and book and no obligation phone call or meeting with my husband Paul Roberts via the website

and that's www.propertyapprentice.co.nz.  

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Topic number four from RNZ on the 26th of November. The rising cost of taking a gamble on the what ifs. As insurance costs balloon to over $16 billion annually, more New Zealanders are taking financial risks by cutting coverage or resorting to self-insurance.

Consumer New Zealand's head of Investigations, Rebecca Styles reported that house insurance cancellations rose from 7% in 2022 to 17% last year due to affordability issues. Although extreme weather events have driven premiums up, Styles warned that dropping this  coverage remains a huge risk. Insurance council figures show spending on insurance jumped from $6.9 billion in 2020 to $10.7 billion last year with life and health insurance, also seeing significant increases.

Overall insurance has experienced the largest price rise of any item in the consumer price index since 2000. Health insurance is a particular concern with premiums up nearly 20% year-on-year in September and more than 200% over 15 years. While consumer New Zealand suggests 17% of people are dropping house insurance,

the insurance council disputes this citing their own figures of 4% to 6%, and noting that roughly 95% of homeowners do retain coverage. Chris Walsh of MoneyHub noted a rising trend in self-insurance, particularly among older New Zealanders who face high health insurance renewal fees and choose to save the money

instead. However, Walsh advised against self-insuring for housing or travel. He stood by Moneyhub's list of potentially unnecessary insurances, which includes funeral insurance, life insurance for those without risk, and sometimes pet insurance depending on the animal. Both experts recommended that people seeking to adjust their coverage should consult a financial adviser.

And my thoughts on this are if you've still got a mortgage against your property, you absolutely need to take insurance cover for that, because the bank can pull funding from you at short notice without it. 

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Topic number five, from New Zealand Herald on the 24th of November, Kiwi save a 12% plan risks backfiring without a total pay ban, provider warns.. National's proposal to increase total KiwiSaver contribution rates to 12% in total has been welcomed as a positive step, but one provider warns of a significant flaw that must be addressed first. Prime Minister Christopher Luxon announced that if reelected his party would gradually raise contributions to match Australia's 12% rate by 2032 split evenly between employees and employees.

So 6% each in other words. This follows an existing plan to lift the default rate to 4% each by April, 2028. Luxon stated that increasing retirement balances is crucial for New Zealand's economic independence. Arguing that the country relies too heavily on offshore investment for infrastructure and growth.

Simplicity managing Director Sam Stubbs described the policy as a potential turning point for economic growth, suggesting that increased savings would fuel investment with compulsory KiwiSaver being the next logical step Koura KiwiSaver founder, Rupert Carlyon agreed that current rates are insufficient.

He calculated that with a 12% contribution rate and a 5.5% annual return, a 21-year-old could retire with $2.13 million compared to just $1.08 million under the current 3% system. Even conservative investors could see an additional $370,000 in savings. However, Carlyon identified a major loophole, employers utilizing total remuneration packages could avoid the increase.

Under these packages, which are used by about half of employers for some staff, the employer's contribution is deducted from the employee's total salary rather than being added on top of that. Carlyon   warned that as contribution rates rise economically, rational workers might prefer immediate cash over locking 12% of their salary away until 65.

Potentially discouraging KiwiSaver investment entirely. He fears employers might use the rate hike as an excuse to shift more contracts to total remuneration in order to avoid extra costs. Consequently Carlyon supports banning total remuneration packages, noting that while it would burden the private sector, it serves as a fiscally neutral way to incentivize retirement savings.

My thoughts on this are: I agree. I think that as employees we should be contributing to our employee, as employees. Sorry. We should be contributing to our employee's KiwiSaver, not making that an added cost to the employee. And if you're an employee, when you are getting pay increases, make sure that that takes the increased contribution rates into account, especially if you're part of that salary package where the KiwiSaver is taken out of your pay rather than contributed separately by your employer.

The data is in the reserve Bank has cut the OCR to 2.25%, and most major economists agree that we're likely at the bottom or at least near the bottom of the interest rate cycle with forecasts predicting rates that could start climbing again in 2026 or 2027. The window to lock and borrowing costs is open right now, but it won't stay that way forever.

Secure your financial future now while the conditions are just right.   📍  📍 Join me at one of our free events called How to Succeed With Property Investing. I'll teach you everything that you need to know about the current market conditions regardless of where you live 'cause all of these events are held online.

So whether you're an experienced investor or just getting started, this free session will equip you with the key tools and insights to help you make more confident and informed decisions. Don't miss out. Register today take the next step towards achieving your financial success, and at the end of the session I'll also tell you more about how we could help you as a client property apprentice to achieve your investing goals without selling property to you.

So if you're interested in finding out more about how we can help you, go to www.propertyapprentice.co.nz today and register for one of   📍  📍 If you've already been to one of our events and you enjoyed it, please feel free to spread the word. And if you'd like to get to know more about how we can help you on your individual journey, book a no obligation phone call or meeting with my husband Paul Roberts through our website, www.propertyapprentice.co.nz.

Thanks for listen.  

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