Local Recovery Solidifies, While Global Uncertainty Continues

A boost in housing market activity and an excellent outlook for the dairy sector are providing green shoots as we look ahead. The regions continue to lead the way on New Zealand’s economic recovery, thanks to the strong performance of our agricultural sector. Economists are predicting continuing success for dairy prices: “The stars are aligning for a strong spring.” We’ve had an unusually robust five months in a row of export surpluses.

The property market is now returning to ‘normal patterns’, if you judge it by mortgage activity: “while it might be tempting to see things as ‘quiet’ at the moment, the figures don’t really suggest that.” Property sales in June were up 20.3% compared to June last year, according to REINZ. Deals were being done all over New Zealand as buyers and sellers found their pricing sweet spot, with particularly high activity levels in Gisborne, Southland, Bay of Plenty and Marlborough. Prices were steady overall, but certain regions are outperforming others. House prices are up year-on-year throughout the South Island (excluding only Canterbury) and Hawkes Bay, Waikato and Hawkes Bay.

Looking longer term, ANZ is forecasting three more OCR cuts before February, which would take the OCR to 2.5% and help the housing market recover gradually through 2026. With local inflation a little lower than expected, and global uncertainty starting to settle down, Infometrics just doubled its growth forecast for 2026.

What’s happening at Zagga?

We’ve been seeing evidence of growth here at Zagga, too. Investors will have noticed the uptick in new loan investment opportunities available, with new borrowers around the country.

Demand to fund new loans has remained high with most of our loans continuing to be snapped up in a matter of hours.

Returns for investors have been strong recently, with most sitting around 8% p.a. and the majority of our loans being for 12 months or less.

We’ll continue to assess risk and returns on a loan-by-loan basis, however expect returns to fall within 7% p.a. soon, more in line with market rates (still well above term deposit rates averaging 3.8%).

With Spring just around the corner, we look forward to funding more quality loans, providing solid, risk-mitigated investment opportunities.

The latest GPD data is out, and at 0.2% growth in the last three months of 2025, it’s risen for three out of the past four quarters. We’re into annual growth for the first time since the third quarter of 2024, which is a hopeful signal that local conditions are improving.

The latest data shows solid increases in retail and accommodation sectors, finance and insurance, media and comms, and arts and recreation. Construction under performed, but data from January and February 2026 looks more positive for the sector, so overall the picture here in New Zealand is encouraging.

The looming concern is the global oil crisis, and the headlines seem alarming. But we’ve been reading some pretty frightening headlines every week since 2020, and we all just keep on going. What can you do in these uncertain times? The best advice is not to panic. If you have an investment strategy that’s taking you toward your financial goals, stay calm and talk to your adviser before you make any sudden moves. As ASB’s analysts point out, “the average conflict results in a very short-term drawdown of roughly 5% (using the S&P500 as a proxy), with the market recovering its losses over an average of 47 days.”

In the longer term, this fuel crisis might have an upside. If it encourages a faster shift to renewables, that will improve New Zealand’s energy security and make us less vulnerable to these oil shocks in future. ANZ is reporting more interest in EVs, and BYD says it’s had a bumper few weeks. The national grid reached a record high of 96.4% renewable in the latest data, a new record, so the decarbonisation megatrend is continuing its onward march here in New Zealand.

In response to the picture both here and abroad, the big banks have been nudging up their interest rates, leading to higher returns for savers. Term deposit rates are up marginally, but still below 4%. Returns on Zagga loans have also stayed steady, and have been consistently paying around 7%. We’re seeing rapid uptake on new opportunities, and we expect this continue throughout 2026 – particularly as momentum grows in the construction sector.

We’ve seen a noticeable increase in both the volume and quality of loan investments coming through this month, and we’re excited to be bringing these new opportunities to our investors. With strong demand and quick uptake on new listings, it’s important to be prepared so you can take advantage of opportunities as they become available.

Local Recovery Solidifies, While Global Uncertainty Continues

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