After three years of flat movement, national house prices are expected to finish 2025 only slightly higher. But 2026 may finally bring a change of pace, with analysts predicting a modest rise of about 4 per cent nationwide.
For the average Kiwi, this means the market is unlikely to surge. Economists expect the economy to “defrost” next year with growth picking up, mortgage rates staying relatively low, and population growth starting to edge higher again. All of these factors generally help lift housing demand.
New listings have consistently outpaced sales, pushing the number of unsold homes to a ten-year high. This has kept prices subdued despite improved affordability and slightly stronger buyer interest. The regions highlight this imbalance clearly: places like Auckland and Wellington, where supply has been particularly strong, have underperformed. Canterbury, Southland and the Bay of Plenty have shown more resilience.
Another layer of uncertainty has come from political chatter, including Labour’s proposal to campaign on a capital gains tax for the 2026 election. While any potential change would be years away, the simple discussion of tax reform has historically made some investors nervous, sometimes slowing market activity in the short term.
Looking into 2026, demand factors are expected to strengthen. Economic indicators suggest the labour market will improve and more migrants will arrive, both of which support housing activity. Mortgage rates have fallen considerably from their 2023 highs, and many fixed rates are still projected to stay under 5 per cent for much of next year. Lower rates increase borrowing power and reduce repayments, which is particularly encouraging for first-home buyers.
But the supply pipeline remains the big swing factor. New builds continue to flow even as population growth has slowed. With the Government focused on increasing housing supply through planning reforms and streamlined consenting, the market could remain well-stocked. If so, even stronger demand may not translate into dramatic price gains.
For homeowners and buyers, the message is that 2026 may bring some upward movement, but not a return to the rapid increases of the past. Steady rather than spectacular growth is the most likely outcome. And with mortgage rates nearing the bottom of their cycle, many borrowers are now weighing whether to lock in longer terms or stay short in hopes of a little more easing.
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