Has NZ finally solved its housing crisis?

A OneRoof housing market report says New Zealand’s long-running affordability crisis could be easing, with Auckland shifting from under-supply to over-supply and the investor-driven era coming to an end.  

Prices have stabilised, and conditions are improving for first-home buyers, supported by government measures and slower migration. 

The latest NZHL Property Report by economist Tony Alexander also points to a modest lift in buyer presence nationwide, although activity remains subdued and the market continues to favour buyers. 

Massey University’s latest Home Affordability Report adds that national home affordability improved 8.7% in the June quarter, following a 9.3% lift in Q1, driven by falling mortgage rates, higher wages, and modest price easing. 

From panic to stability 

A decade ago, OneRoof noted, the market was in turmoil.  

“Ten years ago, the picture was one of a housing shortage and an investor-led market that needed to be brought under control,” it said.  

Auction rooms in Auckland were crowded with investors, migration was surging, and fears of foreign buyers driving up prices dominated headlines. 

The government and Reserve Bank introduced measures such as loan-to-value ratio (LVR) restrictions, the bright-line test, and Auckland’s Unitary Plan to curb investor activity and boost supply. Yet prices surged through the COVID-19 period before falling sharply in recent years. 

Investor market nears its end 

Independent economist Tony Alexander (pictured left) said, “Auckland’s housing scene has gone from under-supply to over-supply… what’s underway is a stripping away of the average mum and dad investors in the property market… I think that dynamic has now changed.” 

Alexander pointed to rising interest and insurance costs, tenant-friendly rules, and weaker migration gains – down to about 15,000 a year versus the 50,000 average over the past decade. Listings are now at a 10-year high. 

First-home buyers step up 

“This is sort of what many of us were hoping for in the past three decades – a better environment for first-time buyers… This is no longer an investor-driven residential real estate market in New Zealand,” Alexander said. “It’s driven by the first-time buyers who have been active since the March quarter of 2023… the investors – not really.” 

Affordability Back to 2014 Levels 

Cotality chief economist Kelvin Davidson (pictured centre) said affordability has returned to pre-COVID levels. 

“Housing in 2014 was no more or less affordable than it is now… if there was massive hysteria back then about housing unaffordability, well there probably should be now,” Davidson said. 

Mortgage payments as a share of income peaked at over 60% during COVID but have since fallen back to around 48% – the same as in late 2014. 

Controls and market evolution 

Infometrics chief forecaster Gareth Kiernan (pictured right) said the LVRs, bright-line test, foreign buyer ban, and debt-to-income (DTI) rules shaped the past decade’s market. However, “affordability metrics… are no better than they were a decade ago, are they?” 

Kiernan believes infrastructure delivery will be key to lasting supply gains and notes a shift toward sharemarket investing among younger Kiwis. 

Finance tightens, prices reset 

Ray White Manukau co-owner Tom Rawson said access to finance has tightened significantly.  

“Ten years ago, an offer subject to finance had a high chance of going through but the same offer now was more of a ‘coin flip,’” Rawson said. 

In Otara, prices have fallen from over $1m during the COVID boom to $600,000-$700,000.  

“People are a little uncertain whether [if] they buy now it’ll be worth more in a month… or even a year,” Rawson said. 

Long-term affordability outlook 

Alexander said prices will likely remain around six to seven times household income—well above the early-1990s multiple of three. 

But Hugh Pavletich, co-founder of the Demographia surveys, is more optimistic, saying, “We are well down the track of actually solving the problem… on the road to restoring affordability.” 

Structural changes and future drivers 

Pavletich believes prefabrication, including large-scale production from companies like ZURU, and AI-driven manufacturing efficiencies will help cut housing costs.  

“I’m very confident… I think I do know a little bit about what I’m talking about,” he told OneRoof. 

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