New Zealand's biggest bank has downgraded its forecast for house prices this year, but new research shows not everyone is feeling the same way.
By Susan Edmunds of RNZ
ANZ said house prices had been broadly flat for three years and there was clear evidence the economy had improved in the second half of 2025, which should be a tailwind for the housing market.
"However, house prices are starting 2026 with little momentum, and uncertainty from the upcoming election - including the prospect of a capital gains tax - may keep some buyers on the sidelines this year," the bank's economists said.
"Moreover, the OCR [official cash rate] looks set to rise sooner rather than later after growth and inflation have both come in hotter than the Reserve Bank expected."
They had brought forward their expectation of the first upward movement in the official cash rate, to December. Previously, they had thought it would happen in February next year.
"As OCR hikes draw closer, mortgage rates are shifting from a tailwind to a headwind for the housing market. Weighing it all up, we have reduced our house price inflation forecast for 2026 to 2% from 5% previously."
They said there was clear divergence between different parts of the country. Wellington prices were down 4% over six months. Auckland's had also fallen, but not as much.
Canterbury, Otago and Southland prices continued to rise.
"Indicators of the balance between demand and supply suggest prices will continue to be flat through the early part of 2026.
"The ratio of sales to inventories is a useful indicator of heat in the housing market and tends to give a three- to six-month lead on house price momentum. It is flat as a pancake, suggesting prices will be too."
Meanwhile Cotality research had found that survey respondents from real estate, banking and related sectors expected price growth this year, and 14% expected price rises of more than 5%.
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Head of research Nick Goodall said while sentiment had lifted from recent lows, expectations remained more conservative in New Zealand than in Australia, reflecting a weaker economy and jobs market and persistently high levels of homes for sale.
"The survey provides an important industry pulse on how confidence is rebuilding across housing after a prolonged period of subdued conditions," he said.
"Sentiment around price direction has clearly improved, but expectations remain grounded with the majority of respondents anticipating modest gains rather than a rapid rebound, which reflects the cautiousness of borrowers and the stuttering economy.
"Supply is still high, but I think demand's coming back, interest rates have obviously come down, and are set to stay low for a wee bit, even though there's a bit of doubt as to how long that wee bit is. And so that sort of brings more, not just willing but able buyers to the market who will be a bit more active.
"I think also the lending restrictions loosening up mean more people are going to be coming forward."
He said the gap between New Zealand and Australian expectations highlighted the different stages of recovery across the two markets.
Canterbury was the most confident region, with 87% of respondents expecting prices to rise and almost two-thirds forecasting growth above the national average.
Auckland sentiment had improved but remained cautious, with 73% anticipating price growth amid concerns around employment conditions, affordability and lending appetite.
Wellington continued to lag, with 63% expecting prices to rise, though only 7% foresaw growth above 5% and most expected underperformance relative to the national trend.
"On the whole New Zealand's housing market is showing tentative signs of improvement, but the same rate of recovery can't be applied everywhere, it's quite fragmented," Goodall said.
"Improving confidence is being tempered by affordability constraints, the jobs outlook and cautious lending conditions, particularly in larger urban markets."
Planning reform had added a layer of longer-term optimism to New Zealand's housing outlook.
Almost half of respondents believed recent changes to planning laws and the Resource Management Act would benefit their region over the next two to three years, though most said it was too early to assess the impact on development activity or housing supply.
Goodall said the reforms were expected to support supply over time, but there would be limited immediate impact and market conditions would continue to be affected by demand-side constraints.
"Policy reform has the potential to improve total housing supply with greater build intensification, but the effects are likely to be gradual rather than immediate," he said.
"In the short term, price outcomes will continue to be driven by sales volumes, listing levels and borrowing capacity."
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