New Zealand house prices lack momentum as buyers sidelined

[WELLINGTON] New Zealand house prices have barely budged in 2026, as surging fuel costs and uncertainty linked to the Iran war sap buyer confidence and keep many on the sidelines.

While prices rose for a third straight month in April, the increase was just 0.1 per cent from March, property consultancy Cotality said on Friday (May 1) in Wellington, citing its home value index. Prices are up just 0.6 per cent since December and are 0.8 per cent lower than in April last year.

Optimism about property prices, which had been fanned by a drop in interest rates and early signs of economic recovery, has faded amid fears that soaring fuel prices will damp demand. The prospect that the Reserve Bank of New Zealand (RBNZ) may raise its Official Cash Rate (OCR) to counter emerging inflation pressures adds to signs that house prices may remain relatively flat throughout 2026.

“We’ve been here before, with small upturns at the start of both 2024 and 2025 eventually going into reverse,” said Kelvin Davidson, chief property economist at Cotality. “We all have to wait and see how the Iran situation evolves but in an environment where an OCR rise seems likely sooner rather than later it’s difficult to envisage anything other than another sluggish year for the housing market.”

Economists at three of the nation’s four largest banks forecast prices will fall in 2026, while Bank of New Zealand expects no change.

Investors have increased bets that RBNZ will bring forward rate hikes to as early as July, while wholesale borrowing costs have risen amid global uncertainty. As a result, home-loan interest rates in New Zealand are higher, which has hampered any property market recovery. 

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Average two-year mortgage rates were 5 per cent in March – the highest in 11 months, according to RBNZ data, and most lenders increased them to 5.2 per cent or higher during April.

“It would not be a surprise to see mortgage rates slowly heading upwards and recent, modest house price increases flattening off or even going into reverse,” added Davidson. “Winter could easily see a sideways or downwards trajectory for prices.” BLOOMBERG