Housing Market Stalls as Council Rates Continue to Rise, ANZ Report Warns

By Anne Gibson, Property Editor – July 24, 2025

The long-awaited recovery of New Zealand’s housing market has come to a standstill, with both prices and sales volumes declining in June, according to the latest report from ANZ. The report also highlights that council rates, a major contributor to inflation, are expected to keep climbing in the coming years, further straining household budgets.

Stalled Housing Recovery
After a brief period of modest price increases, the Real Estate Institute of New Zealand (REINZ) reported a decline in house prices and sales volumes in June, signaling renewed caution among buyers. The seasonally adjusted REINZ house price index fell by 0.3% in June, marking the first decline in several months. This follows a revision of the May growth rate to flat, down from the previous +0.1%.

The current house price level is just 1.1% above its most recent low in October 2024, indicating a fragile market. ANZ’s economists noted that the weakness was widespread, with 12 out of 16 regions experiencing monthly price declines. Although prices remain significantly higher than their 2023 lows, the market is showing no signs of regaining strength.

Abundance of Listings
A notable feature of the recent housing cycle has been the high number of listings on the market. In June, new listings remained at the upper end of the seasonal range, suggesting that sellers are still active despite the cooling market. This could be a sign that homeowners are taking advantage of the current high prices to sell before a potential further decline.

Council Rates on the Rise
The report also forecasts continued increases in territorial authority fees, which are expected to add further financial pressure on households. Over the past four years, council rates have risen by an average of 7% to 12% annually. Another significant increase is anticipated in 2025, with ANZ predicting smaller but still substantial hikes in the coming years.

Broader Inflationary Pressures
Council rates are not the only cost rising. Insurance, interest rates, and maintenance costs are also contributing to the financial burden on homeowners. Inflation in council rates hit a record high of 12.2% nationally in 2024, following three years of increases between 7% and 10%. This is a marked increase from the average annual rise of 4% to 7% between 1992 and 2019.

The report attributes the recent rate hikes to strained council finances, which have worsened since the pandemic. Territorial authority deficits have grown as expenses have outpaced economic growth. As a result, the cost of living for homeowners is expected to remain high for the foreseeable future.

Capital Gains and Running Costs
The report concludes that homeowners who purchased property before the pandemic are likely to have seen substantial capital gains, with the median house price rising around $180,000 since 2019. However, those who entered the market around the 2021 peak are unlikely to have experienced significant gains. Most homeowners are also expected to face rising running costs, as inflation continues to impact council rates, insurance, maintenance, and interest costs.

Conclusion
With the housing market showing no signs of recovery and council rates continuing to rise, the outlook for New Zealand homeowners remains challenging. As inflationary pressures persist, the economic recovery appears to be losing momentum, with the report suggesting that the broader economy may have contracted in the second quarter of 2025.