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New Zealand Household Savings Deteriorate Further; Housing Market Shows Uneven Recovery

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New Zealand’s household savings situation continued to worsen in the first quarter of 2025, with Statistics New Zealand data showing savings falling to -NZ$1.6 billion (a NZ$392 million quarterly decline), marking the third consecutive quarter of negative savings. This was driven by household spending growth (+2.2% to NZ$62.2 billion) outpacing disposable income gains (+1.5% to NZ$60.6 billion).

The housing market staged a modest, uneven recovery in June: national average prices inched up 0.2% month-on-month to NZ$815,389, reversing two months of declines but remaining 16.1% below the 2022 peak. Regional divergence was stark:

Stagnant areas: Auckland and Wellington saw no change.
Gaining regions: Christchurch, Tauranga (+0.6%), and Hamilton (+0.3%).
Sharp contrasts: Queenstown rose 0.6% while Rotorua fell 0.7%.

Market conditions presented mixed prospects: Lower lending rates benefited potential buyers, but employment uncertainty dampened demand, strengthening buyers’ bargaining power. Economists at Cotality noted ample housing supply had fueled cautious sentiment, yet first-home buyers and small investors were gradually entering the market, creating opportunities amid the downturn. The market is expected to remain volatile in coming months, with recovery pace tied to local economic drivers like dairy and tourism sectors.