Falling rates relieve pressure amid cooling housing demand
The cost of living for the average New Zealand household rose 2.4% in the year to September 2025, down from 2.6% in June, according to Stats NZ’s Household Living-Costs Price Index (HLPI).
That marks a continued slowdown from the 8.2% high recorded in late 2022. By comparison, consumer inflation (CPI) sat at 3% over the same period.
The difference between the two measures reflects how inflation is experienced: the HLPI includes interest payments on mortgages and other loans, while the CPI tracks the wider cost of goods and services.
“Interest payments fell 14.3% for the average household over the past year, while the cost of building a new home increased 0.8%,” Stats NZ prices and deflators spokesperson Nicola Growden (pictured) said in a media release.
“This has contributed to the cost of living, as measured by the HLPI, being lower than the overall inflation rate measured by the CPI.”
Mortgage interest payments drop 15.4%
Mortgage interest payments fell 15.4% in the year to September 2025, leading to the lowest inflation rate (0.8%) among highest-spending households, compared with 2.4% across all households.
Superannuitants felt less benefit, recording 3.9% annual inflation, as 85.7% own their homes outright and only 8.5% carry a mortgage.
Power and rates surge despite easing interest costs
Electricity and council rates remain key pressure points. Electricity prices rose 11.3%, adding most to inflation for low-spending households (4.0%) and beneficiaries (3.4%).
Meanwhile, local authority rates climbed 8.8%, hitting superannuitants and low-spending households hardest, where they made up about 18% of annual inflation.
“Superannuitants are more likely to own their own homes and not have a mortgage. Higher prices for rates have more impact on superannuitants than for other household groups,” Growden said.
Rents up 2.6%, pressure higher for lower-income groups
Average rents rose 2.6%, with the largest impacts felt by beneficiaries and Māori households. Rent made up 23% of beneficiaries’ annual inflation (3.4%) and 21% of Māori households’ (2.4%).
Rent still consumes 29.5% of beneficiary household spending, compared with 13.1% for the average household and just 5.1% for the highest-spending group – underscoring the divide in housing affordability.
Population growth slows across all regions
Stats NZ also reported slower population growth in all 16 regions for the year to June 2025, as migration gains weakened.
New Zealand’s resident population grew 0.7% to 5.3 million, down from 1.7% the previous year.
“Lower net migration gains in the June 2025 year led to slower population growth across all regions,” population estimates spokesperson Victoria Treliving (pictured right) said in a media release.
Canterbury remained the fastest-growing region (1.1%), followed by Auckland and Waikato (1.0%), while Nelson and Marlborough saw small declines (-0.3%). Wellington recorded the largest net migration loss (1,700), mainly from overseas moves.
What it means for mortgage advisers
The combination of falling mortgage interest costs and slowing population growth signals a shift toward a more balanced housing market heading into 2026.
For advisers, this means clients may benefit from lower repayments and greater refinancing opportunities, while demand pressures could ease in overheated regions.
With living costs stabilising and household budgets recovering, advisers are positioned to help borrowers lock in savings and prepare for the next rate cycle – a welcome change after years of sustained cost-of-living strain.
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