Monthly Property Insights

Housing market sales activity has been rising across NZ for a couple of years now, but it started from such a low base in 2022-23 that a return to ‘normal’ has only really occurred within the past few months. In the meantime, of course, the stock of available listings for sale has risen, giving buyers the negotiating power and keeping a lid on house prices.

However, there are now some factors coming together which point to a lift in house prices in 2026 and buyers not having it all their own way anymore:

1. Affordability is closer to normal again. I’m not saying that housing is ‘cheap’ as such, or that all buyers will be finding it easy. But if you look at mortgage payments as a share of median household income (44% in Q2), it’s back close to its average (43%) – and in key markets such as Auckland and Wellington those measures are below their averages. In other words, affordability is less of a handbrake on house prices than it’s been for several years.

2. The stock of listings is now falling. After a run of years where stock levels drifted higher, the number of listings on the market is now falling across all parts of the country, as a rise in sales volumes eats into those inventories. True, we’re now into the Spring lift for new listings flows each week. But if agreed sales continue to rise, as looks likely, the balance of probability suggests that total listings will continue to ease downwards, reducing buyers’ pricing power.

3. More borrowers will see lower interest rates soon. Anybody currently taking out a new mortgage will be enjoying rates below 5% across a range of fixed rate terms, but many existing borrowers are still paying closer to 6% on their loans that were previously re-fixed a year or two ago. Yet over the next 3-6 months around 35-40% of fixed debt will reprice to a lower rate, which will give some of these households more financial firepower (although others will save).

4. The economy and labour market should slowly rebound. The last few years have been a tough slog for many businesses, but there are now just some tentative hints emerging that activity is starting to lift. As things stand, our unemployment rate should also start to drop slowly from late this year and into 2026. This is obviously welcome in terms of new jobs, but it also lifts the employment security for everyone else too.

One factor that’s harder to quantify is sentiment/psychology and the so-called ‘animal spirits’ in the housing market – which can be lifted by some or all of those four factors noted above and starts to create a self-fulfilling circle for house price rises.

But a modest lift in house prices seems more likely than a sharp rise

There’ll always be local hotspots where house prices outperform other parts of the country (and vice versa), but even though broader market conditions do seem poised to turn upwards, a fresh and widespread boom in 2026 seems unlikely. After all, the physical supply and demand for property in NZ seems fairly well-balanced at present, with migration slowing and a lot of new dwellings having been built in the past few years. The debt to income ratio rules for mortgage lending are in place too.

For context, after a likely flat result this year, the Reserve Bank predicts house prices to rise by around 4% in 2026 and 5% in 2027. I tend to agree with those numbers; signifying growth, but not a boom.