New Zealand's housing market splits as mortgage rates shift regional fortunes
House prices across New Zealand are showing mixed trends, with some regions experiencing declines while others remain optimistic. Wellington has seen a noticeable drop, while Canterbury leads in confidence about future growth. Meanwhile, economists are adjusting their forecasts as mortgage rates and market demand shift.
Over the past six months, Wellington's house prices have fallen by 4%, the sharpest decline among major regions. Auckland has also recorded a drop, though less severe. Despite this, 63% of Wellington respondents still expect prices to rise, though most believe the city will underperform compared to the national average.
Canterbury stands out as the most confident region, with 87% of respondents anticipating price increases. Nearly two-thirds of them predict growth above the national average. Otago and Southland have also continued to see rising prices, bucking the downward trend in other areas.
ANZ has revised its outlook, now expecting the official cash rate (OCR) to rise earlier than previously thought, likely by December 2025. The bank has also lowered its forecast for national house price growth in 2026 from 5% to just 2%. Early 2026 may see prices remain flat as supply and demand balance out.
Nick Goodall, Head of Research at Cotality, points to returning demand and sustained low mortgage rates as potential drivers for the housing market. Business banks project 3% economic growth in 2026, supported by falling mortgage rates—from 5.5% in 2024 to 2.25% by late 2025—alongside higher private spending and investment. These factors could indirectly boost property prices in the coming years.
The housing market's future remains uneven, with regional differences shaping expectations. While Wellington struggles and ANZ predicts modest growth, Canterbury's optimism and broader economic forecasts suggest a mixed but potentially stabilising outlook. The balance between supply, demand, and mortgage rates will likely determine how prices move in 2026.
