After rapid house price growth during the pandemic, followed by a market cooling as interest rates climbed sharply, New Zealand’s property market appears to be entering a new phase. The latest data shows nationwide housing affordability gradually returning to its best level in nearly a decade. Meanwhile, residential developments are beginning to move forward again, and the property ladder is functioning once more. Yet behind these signs of recovery, uncertainty over interest rates and international events continues to cloud the market’s outlook.
Affordability returns to its best level in a decade
According to property data provider Cotality’s latest housing affordability report, New Zealand’s nationwide house-price-to-income ratio stood at 7.2 in the fourth quarter of 2025. This was its lowest level since 2019 and close to the long-term average of 6.8. By comparison, the ratio reached a record 8.8 at the pandemic property market peak in 2021.
The report puts the national median house price at NZ$803,151, against median annual household income of approximately NZ$111,400. Although homes remain far from cheap, several indicators suggest the pressure on buyers is easing significantly.
Cotality chief property economist Kelvin Davidson said the change reflected several forces working together: house prices had fallen somewhat over the past two years, household incomes had gradually risen, and mortgage rates had dropped markedly from their previous highs.
“Housing is still expensive, but conditions are much better now than they have been over the past few years for first-home buyers or people looking to trade up,” he said.
The easing in mortgage repayment pressure is particularly evident. Based on a loan-to-value ratio of 80%, the nationwide average share of household income required for mortgage repayments has fallen to 42%, returning close to its long-term average. At the interest rate peak in 2022, that share reached 56%.
Deposit pressures have also eased. On average, households now need around 9.6 years to save a 20% deposit, compared with 13.4 years at the pandemic property market peak.
Auckland and Wellington show the greatest improvement
Among the main cities, Auckland and Wellington have recorded the most pronounced improvements in affordability.
Auckland’s median house price is currently about NZ$1,040,000, with a house-price-to-income ratio of 7.5. That is the lowest in more than 11 years and even slightly below the region’s long-term average of 7.7. The time needed to save a deposit has also fallen to around 10 years, below its long-term average.
The share of Auckland household income needed for mortgage repayments has dropped to 44%, a substantial fall from the peak of 63% at the end of 2021.
Conditions are even less stretched in Wellington. Its median house price is approximately NZ$878,869, with a house-price-to-income ratio of 6.4, broadly in line with its long-term average. This makes it the most affordable market among the main cities in relative terms.
By contrast, Tauranga remains the least affordable of the main cities, with a house-price-to-income ratio of 8.5. However, this is significantly below its peak of 11.9 in 2021.
The property ladder is moving again
A longstanding problem in New Zealand’s property market has been that even after buying their first home, buyers struggle to move up to a larger property. The latest figures suggest this is changing.
Take a typical example: a couple bought their first home 10 years ago for NZ$302,500, the national lower-quartile house price at the time. If they sold at today’s lower-quartile price of around NZ$580,000, their property would have risen in value by approximately 92%.
After deducting the remaining mortgage and selling costs, they could have around NZ$363,000 in equity. This could fund a deposit on their next home, equivalent to approximately 48% of a property priced at the national median of NZ$753,106.
At current mortgage rates of around 4.7%, these buyers would need a loan of approximately NZ$389,886, with weekly repayments of about NZ$468. Assuming two full-time workers aged 35 to 39 earn the national average wage, their combined weekly income after tax would be around NZ$2525. Mortgage payments would therefore account for only 18.5% of their income, a relatively manageable level.
This means buyers on the “second rung” of the property ladder, who already own their first home and are ready to upgrade, once again have room to move upwards.
Development projects begin to re-emerge
Improved affordability is also gradually restoring confidence in the property sector. Recently, there has been a marked increase in announcements of residential developments moving forward across New Zealand.
In northern Auckland, Templeton Group’s Warkworth Ridge community has completed 100 homes and will ultimately have more than 600. Around 70% of the sections have already sold.
In Takanini, South Auckland, listed developer Winton Land plans to build the large Sunfield community development across 244 hectares, providing approximately 4000 homes. It has received preliminary approval through the fast-track process.
In Tauranga, Classic Developments is advancing the Tauriko West development, which is planned to deliver up to 4000 homes. Its first stage, Riverside, will provide around 1200 homes.
Meanwhile, construction has officially begun on Queenstown’s major mixed-use Te Taumata Lakeview development. With total investment of approximately NZ$3,000,000,000, it will ultimately provide more than 1000 homes.
Official figures also point to a pickup in development activity. Stats NZ data shows that 36,944 new homes were consented nationwide in the year to January this year, up 9.3% on the previous year. Apartment and townhouse consent numbers rose by 26% and 14% respectively.
However, the construction industry still faces challenges. Residential construction activity fell 1.1% from the previous quarter in the fourth quarter of 2025, while the total value of construction was down 3.6% on a year earlier. This suggests the industry’s recovery remains at an early stage.
Interest rates and international events introduce new uncertainty
Despite clear signs of recovery in New Zealand’s housing market, its future direction remains highly uncertain.
Independent economist Tony Alexander said escalating tensions in the Middle East could push up global oil prices and affect New Zealand’s economy through supply chains and inflation. Recent consumer confidence surveys also show a marked decline in New Zealanders’ willingness to spend.
In his survey at the end of last year, a net 23% of consumers still planned to increase spending. The latest survey shows that figure has fallen to just 4%. This shift suggests economic growth could slow, while also increasing uncertainty over the direction of interest rates.
Alexander believes borrowers may need to consider their fixed-rate terms more carefully in the current environment, as wholesale interest rates are already showing signs of rising.
Housing market recovery still depends on supply
Despite the marked improvement in affordability, experts generally agree that the long-term health of New Zealand’s property market still depends on continued growth in housing supply. Kelvin Davidson said lasting improvements in affordability require New Zealand to keep building more homes, ensuring not only that total numbers increase but also that supply keeps pace with changes in population and demand.
“The good news is that the Government is currently advancing key policies on land supply and infrastructure development, both of which are important to increasing housing supply.
Overall, New Zealand’s property market is gradually moving beyond the extreme volatility of recent years towards a state closer to long-term equilibrium. House prices are no longer rising as rapidly as they did during the pandemic, while market fundamentals are gradually improving.
Reflections and conclusions
Several recent datasets suggest New Zealand’s property market is gradually returning to conditions closer to its long-term averages. Falling house-price-to-income ratios, lower mortgage repayment pressure and shorter deposit-saving periods all indicate that the affordability problems troubling buyers in recent years are easing. Residential developments restarting also offer fresh hope for future housing supply.
However, it remains to be seen whether the housing market has truly entered a sustained recovery. Global events, oil price movements and future interest rate changes could all have fresh effects on the market.