Lower prices and easing mortgage costs reshape affordability across key centres
Housing affordability across New Zealand has improved to its most favourable level in almost 10 years, offering some relief for first-home buyers and upgraders after the post‑COVID boom.
The latest Cotality NZ Housing Affordability Report for Q4 2025 shows the national value‑to‑income ratio at 7.2, the lowest since a brief period in 2019 and before that 2016, and not far above the long‑run average of 6.8.
“Lower property values, rising incomes, and falling mortgage rates have all helped ease the pressure on buyers,” Cotality NZ chief property economist Kelvin Davidson (pictured) said.
While Davidson stressed that “housing certainly isn’t cheap”, he noted that for those trying to enter the market or trade up, conditions now are “much closer to the country’s historic norms”.
The latest Cotality NZ Monthly Housing Chart Pack reinforces the trend, showing national median property values fell a modest 0.3% over the three months to January, leaving prices 17.5% below their 2022 peak.
Mortgage servicing back near normal, deposits still a hurdle
The affordability report shows mortgage servicing has seen the sharpest improvement. Repayments on a typical new home loan now absorb about 42% of gross median household income, broadly in line with the long‑term average and well down from the 56% peaks recorded in early 2022 and again in late 2023.
“Servicing a relatively new mortgage is also back to around its normal levels and is much improved from the situation a few years ago,” Davidson said, adding that in the current lower interest rate environment mortgage costs “may not be the significant handbrake on medium‑term house price growth that it was a few years ago”.
The deposit task, while easier than during the boom, remains a key barrier. The years required to save a 20% deposit have fallen to 9.6, down almost four years from the post‑COVID peak of 13.4, but still above the historical norm of around nine years.
Davidson noted that many first-home buyers do not actually need a full 20%, with banks’ LVR allowances providing alternative pathways.
Regional gaps and rental strain keep outlook cautious
Affordability trends vary across the main centres. Tauranga remains the least affordable with a value‑to‑income ratio of 8.5, despite easing from 11.9 in 2021. Auckland has improved to 7.5, now slightly better than its long‑term average of 7.7, while Wellington is the most affordable major market at 6.4, broadly in line with its norm.
By contrast, Hamilton, Christchurch and Dunedin have seen smaller gains as values have held up more firmly. Rental affordability also remains stretched, with rents absorbing 27.9 per cent of gross income nationally, still above the 25.8 per cent long‑term average, even as recent bond data show some markets such as Wellington recording year‑on‑year rent declines.
Davidson said affordability “may act less as a handbrake on property value growth than it has in recent years,” but cautioned that lasting improvement depends on more supply.
“A lasting improvement in housing affordability ultimately requires more homes to be built, not just in absolute terms, but also relative to demand,” he said.
Download Cotality’s latest Housing Affordability Report.
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