House prices seen inching up, not taking off
ANZ has signalled another year of subdued house price growth, with the bank trimming its 2026 forecast as rising rate expectations and election uncertainty weigh on sentiment.
Economists from ANZ New Zealand – the country’s biggest bank and largest home lender, with almost $114 billion in housing loans as at 30 September 2025 – say the downgrade reflects both stronger‑than‑expected data and new political risks.
ANZ's Sharon Zollner, Matthew Galt, and David Croy, (pictured, from left to right) note that “house prices have now been flat for three years.” Nationwide, the REINZ House Price Index is down just 0.1% year-on-year on a three‑month average, with recent monthly moves “alternating between small falls and increases.”
“Indicators of the balance between demand and supply suggest prices will continue to be flat through the early part of 2026… It is flat as a pancake, suggesting prices will be too,” they say, pointing to median days to sell stuck at 45 – above the long‑run 40‑day average – and auction clearance rates signalling little movement either way.
On the supply side, they highlight that inventories have hovered around a 10‑year high for over a year, supported by resilient house‑building and consents per capita that have only eased back to long‑run averages, plus low but gradually recovering net migration held back by a strong Australian job market.
Against that backdrop, ANZ has materially softened its outlook.
“Weighing it all up, we have reduced our house price inflation forecast for 2026 to 2% (from 5% previously),” the economists said. “We have kept our house price inflation forecast for 2027 unchanged at 4.5%, which would see it broadly match income growth.”
Regional split and election uncertainty cap momentum
The report highlights a clear North/South divide. Wellington prices are down about 4% over six months, with Auckland drifting lower too, while Canterbury, Otago, and Southland continue to rise on the back of “stronger regional economies.”
On top of that, ANZ warns the upcoming election – including “the prospect of a capital gains tax” – may keep some buyers and investors “on the sidelines through the year”, further limiting upside in 2026.
They note that when similar proposals surfaced in 2014 and 2017–19, investors did pull back, but prices still rose by “around 2% to 8% per year” in those periods, suggesting tax debate can restrain activity without necessarily triggering outright price falls.
OCR hike pulled forward, mortgage rates to drift higher
The other key driver behind the lower price forecast is interest rates. Stronger‑than‑expected GDP and a 3.1% CPI print in Q4 2025 mean “the OCR looks set to rise sooner rather than later after growth and inflation have both come in hotter than the RBNZ expected,” the ANZ economists said.
ANZ has “brought forward our expectation for the first OCR hike to December 2026 (previously February 2027)” and expects the cash rate to settle at a neutral 3% by April 2027. As a result, “mortgage rates are shifting from a tailwind to a headwind for the housing market.”
For advisers, that translates into a market where modest price growth is still on the table, but servicing resilience and rate strategy are critical: clients should plan for gradually higher fixed rates and a long, shallow up‑cycle rather than another boom.
Access ANZ's New Zealand Property Focus report here.
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