Mortgage commitments indicate brighter horizons

The construction sector has received a timely boost, with March 2025 figures from the Reserve Bank of New Zealand and Stats NZ pointing to growing confidence in the housing market  

With new mortgage commitments surging and a solid rebound in building consents, contractors and developers could be entering a more active period following a subdued start to the year. 

Mortgage lending surges 

According to the Reserve Bank of New Zealand (RBNZ), total monthly new mortgage commitments hit $8.5bn in March, a 45.2% jump from February 2025 ($5.8bn) and a 40.7% increase compared to March 2024.  

Investor lending saw the sharpest growth, up 64.8% year-on-year, followed by other owner-occupiers (up 39.7%) and first-home buyers (up 24.5%). First-home buyers now make up 19.7% of new commitments, suggesting a healthy appetite for entry-level housing stock. 

These figures point to renewed demand, particularly from investors and younger buyers seeking new builds or homes requiring renovation. The rise in average new loan size – up 7.9% month-on-month to $387,314 – further suggests a willingness to spend more on housing, likely boosting demand for higher-spec construction. 

Consents show signs of life 

Stats NZ’s building consents data reinforces the trend. March 2025 saw a seasonally adjusted 9.6% rise in new dwellings consented, following a modest 0.7% lift in February.  

Despite a reduction in the total number of new dwellings consented in the year ended March 2025 (34,062, -3.3% compared with the year ended March 2024), the South Island continued to perform strongly. Over the same period, the South Island saw a 6.4% increase in consents, with Otago leading the way.  

“In the 12 months to March 2025, 2,556 new homes were consented in Otago – the highest number ever recorded for the region,” said Stats NZ Economic Indicators Spokesperson Michelle Feyen. 

Otago also consented 2,442 new homes in the year ended February 2025, signaling strong performance in the region. 

Across New Zealand, stand-alone houses continue to make a comeback, with an increased share of total new-home consents, while multi-unit developments (townhouses, apartments, and retirement units) are experiencing a slight decline. This shift presents opportunities for construction firms with experience in simple residential building. 

A recent regulation change, set to be introduced by the end of 2025, to allow “trusted” builders to build simple, single-story stand-alone homes without a consent or Code Compliance Certificate could present a further opportunity for firms skilled in this type of work. 

Gimmer of optimism 

“Combined, the lending and consents data point to an incoming pipeline of work. The sharp lift in March mortgage approvals is likely to filter through to actual construction activity in the coming quarters, especially as financing becomes more accessible and consumer confidence improves,” said The Builder’s Business Coach Graeme Owen. 

“After a slow patch, March’s data offers a glimmer of optimism. The construction sector, particularly residential, looks to be stabilising and may be entering a recovery phase. For those on the tools or behind the blueprints, now is the time to prepare for increased activity and sharpen operations for the months ahead.”