Watch JB's latest NZ property market update below, or keep scrolling to read the full article:
Far out, it’s been a ride—but we’ve almost done it (survived 2025, that is).
For our final market update of the year, we’re looking ahead at what’s in store over the next 12 months.
The good news? If 2025 has been the year of big ups and downs and change—across interest rates, the housing market, and the economy—2026 is shaping up to be a year of more stability.
Let’s get into it.
Starting from the top, where are things headed with the Official Cash Rate (OCR)?
November’s OCR announcement was the Reserve Bank’s (RBNZ) last opportunity to inject some confidence into the economy—to send us all off on the summer break feeling a bit more positive—and really cement our chances of a decent recovery next year.
The result (a 0.25% cut down to 2.25%) was widely anticipated across the market, and my two cents? It was the right call.
But borrowers should now be working on the assumption that we’re very much at the bottom of the interest rate cycle
The only thing that could see the OCR get even lower next year is if we get any more bad news, and—*touch wood*—I think that’s looking increasingly unlikely.
Parts of the economy (agriculture and the regions) are booming right now. And as more of us start feel the tangible benefit of lower interest rates, and consumer confidence picks up, that sense of positivity will filter through to the main centres, too.
The only real potential spanner in the works lies in our next round of GDP data (for the September 2025 quarter) due out on 18 December.
We’ve had some big curveballs on the GDP front this year, but expectations for that are broadly positive i.e. the numbers should show that we’re on the road to recovery.
The economy isn’t going to take off again in a big way—especially not with the uncertainty of an election next year (more on that soon)—but come late January and into February, things should be feeling a lot more positive.
At this stage, the market is expecting the OCR to stay as is until early 2027, and that, from there, it’ll be a gradual return to the RBNZ’s estimated ‘neutral’ point of 3.00%.
So, the next time there’s movement to report on the OCR front, it’ll probably be upwards—but it won’t be for a while yet.
What does that mean for interest rates?
In short, interest rate falls are probably done and dusted.
The reason being that even though there’s plenty of competition playing out between the banks at the moment, it’s all happening in the cashback space.
At the time of writing, we’ve had three major lenders offering 1.50% cashbacks on all new loans approved before 16 December (including refinances and new property purchases).
Banks like cashbacks because:
- Experience has taught them that the promise of cash in hand is a lot more effective at winning new customers than rate discounts.
- It also means they’re only competing for that really price-sensitive portion of the market, rather than across their whole mortgage book, which is a win for their bottom line.
While it’s a sweet deal for anyone who’s eligible, it doesn’t leave a whole lot of room (margin-wise) for lenders to go out and compete on rates as well.
As such, we’ve seen next to no movement in fixed-term rates in the fortnight or so since our last OCR change, and what little there has been has actually been upwards.
One of our main banks has just increased several of its longer-term fixed rates (two years and out), in response to spiking wholesale rates.
It’s yet another clear sign that we’re very much at the bottom of the cycle, meaning the banks are now intent on protecting their margins at all costs.
It means the chances of the one-year rate getting down to 3.99% (which I’ve talked about previously) now feel like an extremely long shot.
With the best one-year rate sitting at 4.49%, and some sub-5% options still remaining for borrowers looking to fix longer-term, I’d say that’s about as good as things are going to get—and now’s the time to be locking in if you haven’t already.
Of course, 2026 is also an election year—so, what does that mean for our economic recovery?
Elections are always unsettling, especially when there’s a bit of a question mark in people’s minds over who might end up in charge.
The concern is less about National vs. Labour (which are really just left and right of centre) and more about the fringe parties that could end up making it into a coalition and pulling things towards the extremes.
As uncertainty ramps up—not helped by the media’s constant speculation about potential leadership coups and infighting—the natural reaction, for many of us, is just to sit on our hands and wait it out.
So, while the first half of 2026 looks positive, economic progress is likely to be a bit more stilted towards the back end of the year.
Right now, the election looks like it’s anyone’s to win or lose. The polls are tight.
It’s a bit of a chicken and egg scenario for the different parties to navigate—because while the election will impact the course of our recovery, the state of the economy is also probably going to be what decides the vote.
National, for its part, will be desperately hoping for a strong start to the year. It really needs us all to go out with open wallets over summer, and come back from the break feeling much more confident, so it can claim to have made good on its promise of turning things around.
Assuming we do gain some decent traction over the coming months, I can’t see voters wanting to rock the boat with a change of government.
If not, the protest vote could easily swing in Labour’s favour. It all remains to be seen.
And finally, what’s in store for the housing market?
At any other point in time, the interest rate falls we’ve had over the last 18 months (down 3.00% from peak) would’ve lit a match under house prices and sent them skyrocketing again.
But while some parts of the market—like Canterbury—have gone from strength to strength, main centres like Auckland and Wellington have experienced further falls this year.
All in all, prices are probably up 0.50% on average across the country, which is about as close to flat as you’re going to get.
So, what’s going on? Well, traditionally, the two big things that have contributed to house price growth in New Zealand are:
- Falling interest rates—we’ve been in a falling rate environment for the last 30 years or so, from around 20% in the mid-80s to lows near 2.00% during COVID. As borrowing money has become progressively cheaper, people have naturally been able to afford bigger loans, supporting house price growth.
- Demand outstripping supply—thanks to a combination of factors like high levels of immigration, and just not building enough to keep up with growing demand.
After the rollercoaster ride of the last few years, we’re heading into 2026 with what feels like a good level of balance in the housing equation.
Supporting the supply side of things:
- Build levels have remained relatively high despite this latest recession, especially compared to what we saw during the GFC.
- The cost of construction has come down significantly, which will help to keep prices under control. Construction costs are currently running at about $2,500/m2, which we haven’t seen in about a decade.
- We’ve also got a government dead set on increasing land availability for housing—ensuring supply better matches demand—through a number of reforms (including the latest proposed changes to the RMA).
And helping to keep demand in check:
- Kiwi borrowers gorged on debt during the interest rate lows of COVID, and we’re still up to our eyeballs in it—so, even with interest rates down as much as they are, the fact is people can’t really afford to borrow more.
- Immigration is still flat, and given it’s largely driven by people searching for job opportunities, things are likely to remain that way until we’re more firmly on the road to economic recovery.
The net result of all of that is: moving forward, house price growth is going to be much more aligned with income growth—which is as it should be.
In terms of what that means for next year, I think we can expect to see house price increase somewhere around 3.00%.
Looking to 2027 and beyond—once we’re deeper into our recovery, and wage growth has picked up—we might be looking at more like 5.00% each year. But the days of house prices doubling every decade are behind us.
What are the key outtakes for different parts of the housing market?
There’s been lots of talk this year about what a buyers’ market it is out there right now, and it’s going to be the same story for much of 2026. Time and choice are on your side—make the most of it. Make sure you’re really clear about what you’re after, and whether a property ticks your boxes, before you rush into making an offer.
The rental market is tough going at the moment. Rents are down, and more and more landlords are reporting trouble finding good tenants.
With house prices expected to remain relatively flat over the next few years, the focus should be less on yield and more on buying well-designed homes with good liveability—which is important not just for attracting tenants, but for when you eventually sell, too.
With listing numbers as high as they are, buying is the easy part of the equation. It’s getting your existing property sold that could cause you a few headaches.
The best approach for anyone moving / upgrading / downsizing at the moment is to sell first, ideally with a long settlement date, then turn your attention to finding a new property—with the knowledge that, if worse comes to worst, you can always rent.