A Reuters poll shows steady price gains through 2027 despite affordability concerns
New Zealand house prices are forecast to rise 3.8% in 2025, according to a new Reuters poll of property analysts, as interest rate cuts by the Reserve Bank (RBNZ) help reignite market activity.
That forecast follows three consecutive years of annual price declines, with home values down nearly 20% from their late-2021 peak. Now, as mortgage rates ease and further policy support looms, signs of recovery are emerging.
Still, near-term growth has stalled. The latest Cotality Home Value Index showed a 0.1% dip in the national median value in May, with prices now 1.6% below year-ago levels and 16.3% under their January 2022 peak.
“There’s a lot of uncertainty out there at the moment. Buyers are still a little bit more hesitant than we thought,” Jarrod Kerr (pictured left), chief economist at Kiwibank. told Reuters.
“The rebound, although it started, is not quite as strong as we had hoped for. We are pushing back our expectations for the recovery more into 2026. It's not that the story’s changed, it’s just that the story is being delayed.”
Further RBNZ cuts expected to fuel demand
RBNZ has already cut rates by 225 basis points since August, and another 50 basis points of easing is forecast by year-end. Mortgage rates have dropped nearly 20% from 2023 levels.
In the Reuters survey conducted between May 16 and June 4, 10 of 12 analysts said rate cuts this year would be “stimulatory” for the housing market. Only two respondents said they expected no impact.
Falling rates are also shifting borrower behaviour. RBNZ data showed a growing preference for longer-term fixed mortgages, with the share of short-term (floating or up to six months) loans falling to 53.3% in April from 56.9% in January. Meanwhile, fixed terms between one and two years rose by $13.5 billion to $61.5 billion, suggesting confidence in a more stable rate outlook.
Forecasts point to further gains of 6.0% in 2026 and 5.1% in 2027, driven by cheaper borrowing costs and rising buyer confidence.
Homeowners benefit, but affordability still a challenge
Although prices have eased from their peak, housing affordability remains a major hurdle – especially for first-home buyers.
“It’s still difficult to get onto the housing ladder. But it was practically impossible by the end of 2021, where house prices went up 50% in two years from levels that people generally agreed were too high to start with,” said Sharon Zollner (pictured right), chief economist at ANZ.
“We haven’t solved our housing affordability problem, but it is easier than it was, so some first-home buyers are taking advantage of this opportunity. But New Zealand house prices are still very expensive in an international comparison relative to incomes and rents.”
On average, house prices are approximately six times the median household income, making deposits hard to save amid high unemployment and lingering effects from last year’s technical recession.
More supply, better outlook for first-home buyers
There is some optimism for aspiring homeowners. Property listings rose 6.2% year-on-year in April, according to REINZ, as more sellers enter the market at lower price points.
In the same Reuters survey, nine out of 11 analysts said conditions for first-home buyers would improve over the next year. Two respondents expected them to worsen.
Urban rents outpacing inflation
Urban rents are expected to rise 3% in 2025, outpacing the projected 2.2% inflation rate, according to a smaller sample of housing analysts.
