Borrowers less fearful, but 2026 rate-cut hopes fading fast
New Zealand’s housing market is entering 2026 on firmer footing, with industry sentiment improving after a long stretch of soft values and wary buyers, according to Cotality’s Decoding 2026 report.
The survey of real estate agents and finance professionals across New Zealand and Australia shows nearly three-quarters of New Zealand respondents expect prices to rise in 2026, with 14% anticipating growth above 5%.
Cotality NZ Head of Research Nick Goodall (pictured) said the shift marks an important turning point, but expectations are still grounded.
“The survey provides an important industry pulse on how confidence is rebuilding across housing after a prolonged period of subdued conditions,” Goodall said in a media release.
“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.”
Reinforcing that tone, ANZ has cut its 2026 house price inflation forecast to 2% from 5%, and now expects 2027 growth of about 4.5% – broadly in line with income – signalling banks see only slow, income-like gains rather than another boom.
Regional split matters for credit strategy
Cotality’s results reinforce that recovery speed varies by region.
Canterbury is the stand-out, with 87% of respondents expecting prices to rise and almost two-thirds forecasting growth above the national average. Auckland sentiment has improved but remains guarded, with 73% anticipating price growth amid concerns over “employment conditions, affordability, and lending appetite.” Wellington continues to lag, with 63% expecting prices to rise but only 7% seeing growth above 5%.
“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.”
Rates, policy reform shape the 2026 playbook
Interest rate views are central to sentiment. The survey period spanned the Reserve Bank’s late-November OCR cut to 2.25%, and expectations shifted afterwards. Before the decision, 54% of respondents expected at least one rate cut in 2026; after, that fell to 43%, with more now seeing rates on hold.
“The expectation of short-term rate relief has definitely softened following the rate cuts we had in 2025,” Goodall said. “Lower mortgage rates have begun flowing through the market as fixed terms roll off and they’ve also helped to support record levels of first-home buyer activity. We’re also starting to see mortgaged investors gradually re-enter the market too, even as capital growth expectations remain tempered.”
Planning and Resource Management Act reforms add a layer of longer-term optimism, with almost half of respondents expecting regional benefits over the next two to three years. But, as Goodall noted, “the effects are likely to be gradual rather than immediate,” and “in the short term, price outcomes will continue to be driven by sales volumes, listing levels and borrowing capacity.”
The general election later in 2026 will inject additional uncertainty, with borrowers and lenders watching for any policy changes that could affect credit availability or investor appetite.
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