The shortest day of the year is behind us—and if you squint hard enough, there's a decent metaphor in there for where the property market is at too.
Two steps forward, one step back
For regular readers, you might remember me saying before Christmas that we’d see the final parts of this property cycle play out in the first half of 2026.
Those timings have stretched a bit—thanks to the impact of the conflict in the Middle East and the fact that we've got an election on the horizon, which always has a dampening effect.
We’re now expecting the tail of this cycle to extend to around the end of the year.
That said, there are signs of life. Property transaction volumes are starting to pick back up after a soft March-May.
It’s not all rosy, but the North Island is showing some early movement. Meanwhile, Canterbury and Queenstown Lakes continue to outperform the rest of the country—they haven’t really heeded the memo about slowing down.
Five out of 1,500—and we planned for it
We currently have two mortgagee sales underway—both construction-related, and both reflective of where we're at in the property cycle.
Assuming they play out as we expect, the construction loan reserve fund will absorb any losses, doing exactly the job it was designed to do. No investor losses of principal or interest would occur.
If they complete as anticipated, that brings the total number of mortgagee sales to five out of ~1500 construction loans settled to date.
If you'd like to go into more detail you can check out our video on understanding credit risk (and how Squirrel manages that risk) here.
For context, our home loan track record remains clean. No mortgagee sales or losses across ~300 loans settled. That difference in outcome reflects a genuine difference in risk profile, which is exactly why the returns on Construction Loans is higher than that on Home Loans.
We plan for scenarios like this. It's precisely why our reserve funds exist, and why we continue growing them. As always, we aim to be transparent, with the good news and the bad—so you can track the performance of our reserve funds here.
Rates are still heading up, just maybe not yet
In my last update, I flagged that the market was pricing in three OCR increases before the end of the year.
The data since then still supports that picture, though the timing of the first move is a little less certain than it looked. July is no longer a lock.
Keep an eye on the RBNZ’s announcement on 8 July—I expect we’ll get a clearer read on their thinking than usual.
If the first move gets pushed out, that’s not necessarily bad news; rates are still expected to move upward through the year, and our floating rate structure means Squirrel savers and investors will benefit when they do.
We’re hiring
Slightly off the usual script, but it feels right to mention here.
We’re looking for an excellent customer service leader to join the team at Squirrel HQ in Auckland.
Ideally you’ll have a banking background, and you’ll be leading a team that supports both investors and borrowers. If that sounds like you, or someone you know, you can find more detail on our website.
Questions, comments, ideas?
As always, if there’s something you think we’re doing well - or could be doing better - you can reach me on dave@squirrel.co.nz.
