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Market Outlook: August 2025

Updated: Aug 12, 2025




Our Executive member Murray Jervis attended the recent Property Council Market Outlook event on the 5th of August and has prepared a short summary, highlighting a complex economic landscape with challenges in construction and retail but positive signs in agriculture and industrial sectors. Please note, the below notes were taken by Murray at speed, and trends and forecasts are by definition subject to change. Murray is not offering financial advice, and apologises for any misquotes.

 

Sharon Zollner - ANZ Chief Economist, ANZ Ian Little - National Director - Research, Colliers


Economic recovery is underway (even if it doesn't yet feel like it), supported by expected interest rate cuts and resilience in certain markets, while consumer and business stresses vary across regions and demographics.


  • Boom and Bust: Sharon started off saying the bust following the sugar rush high boom of the post Covid period of consumerism has not been as bad as she thought it could have been. New Zealand has proven to be reasonably resilient, even if we are still feeling the pain.

  • Construction Sector Challenges: Construction has experienced a significant boom and bust cycle, with many residential projects failing and retail development beginning to decline. Business insolvencies, particularly in construction, are rising due to economic pressures and stricter tax enforcement.

  • Agricultural Strength: The South Island's agriculture sector is performing well, driven by high commodity prices, a low NZ dollar, and strong demand for dairy and meat products. NZ exposure to US tariffs is limited, with only 12% of NZ exports going to the States. We are more exposed to the buoyancy of China in terms of economics. The price of butter was discussed - this is in essence a global commodity price, the unfortunately Kiwi's just have to pay!

  • Retail Sector Variability: Large "big box" retail spaces are stable, but local strip malls face significant challenges. Regional centres are more of a mixed picture with malls that have diversified with mixed-use hospitality and leisure tenants typically performing better.

  • Interest Rates and Economic Recovery: Interest rates are expected to be cut multiple times by early 2026 (0.25% drops in August, November, February), with OCR forecasts suggesting a drop to 2.5%, signalling better times ahead over the longer term as families are able to shift mortgages to the lower tariffs.

  • Consumer Financial Stress: Younger adults (18-24) face more financial stress due to lack of assets, while older groups (+60) tend to be less stressed. Family aged people (30 - 49) typically carry the most debt. Consumer arrears are very low in the South Island, driven in part by lower cost housing and strongly performing agriculture sector but remain mixed in parts of the North Island, especially in the poorer areas such as Bay of Plenty/East Cape.

  • House Prices: Generally fairly static. ANZ expect a 2.5% increase this coming year.

  • Job market Trends: Unemployment is expected to peak at 5.1%. Job advertisements are currently at their lowest point but anticipated to ramp up and improve gradually matching the economic recovery. Finding roles remains difficult, particularly as government and local authority recruitment remains supressed. Business confidence remains cautious.

  • Commercial Real Estate Dynamics: Commercial vacancy rates are rising overall, especially in secondary properties, but prime locations remain strong. Landlords are investing in pre-fitted office spaces to attract tenants. Auckland is however outperforming the major Australian centres in terms of commercial vacancy rates.

  • Industrial Sector Growth: Industrial real estate demand exceeds supply, particularly in date centres, e-commerce, food security/cold storage centres, and logistics, with significant new developments underway.

  • Retail and Office Market Outlook: Consumer spending pressures have halved sales activity since 2022. Big box retail performs better than strip retail, and office demand now requires sustainable features as standard, with seismic concerns varying by location.


In a nutshell, it might not feel like it, but the signs are suggesting that it’s improving! Construction and Retail and still struggling – although big box is holding its own. It’s not that sexy, but industrial, logistics and distribution is the current dance party!



Murray Jervis Director | Interior Design Leader

GHD Design

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