BNZ forecasts a 1.5% annual increase in New Zealand’s housing market by the end of 2026, signaling cautious recovery amid persistent affordability challenges and elevated interest rates. The projection reflects gradual stabilization in residential property valuations.
- BNZ forecasts a 1.5% year-on-year rise in New Zealand house prices by end-2026
- Median house price expected to reach NZ$940,000 by December 2026
- Current median price stands at approximately NZ$926,000 (early 2025)
- Market stabilization driven by reduced mortgage arrears and rising housing completions
- Forecast hinges on delayed interest rate cuts and sustained employment growth
- NZX-listed property firms may see re-evaluation as long-term outlook improves
New Zealand’s housing market is expected to see a modest rebound in 2026, with house prices projected to rise by 1.5% year-on-year, according to BNZ’s latest economic outlook. This forecast marks a shift from the recent period of price declines and stagnation, driven by tighter monetary policy and high borrowing costs over the past two years. The forecast assumes a gradual decline in official cash rate pressures, with expectations of rate cuts beginning in late 2025. BNZ notes that while demand remains subdued due to household debt levels and inflationary pressures, the supply of homes for sale is stabilizing, contributing to a more balanced market. The median house price across the country is projected to reach approximately NZ$940,000 by December 2026, up from around NZ$926,000 in early 2025. Key indicators supporting the outlook include a steady decline in mortgage arrears, improving employment data, and a moderate increase in housing completions. However, the forecast remains sensitive to macroeconomic shifts, including global inflation trends and domestic wage growth. The performance of the NZDUSD exchange rate may also influence investor sentiment, particularly for foreign buyers in high-value urban centers like Auckland and Wellington. Market participants, including real estate developers and mortgage lenders, are adjusting their strategies to align with the long-term forecast. Financial institutions are expected to maintain conservative lending standards, and the NZX-listed property sector could see incremental investor interest as the outlook improves. The forecast underscores the importance of policy consistency in supporting housing market stability.