The biggest forces behind New Zealand's housing boom have changed. Don't expect prices to double every decade

Tuesday, 14 July 2026

The housing market isn't getting any stronger, is it? The short answer is: probably not, at least not for most of the country.

But I think there's a bigger question worth asking. What if the era of house prices rising much faster than inflation is over?

For decades, New Zealand's property market was propelled by three enormous forces: high migration, steadily falling interest rates and a political consensus that ever-rising house prices were, if not desirable, at least acceptable. Every single one of those forces has weakened.

Migration

This is a biggie. While the loss of particularly young New Zealanders to Australia and other places has slowed down, it is still happening. Latest Stats NZ figures show 111,000 kiwis left our shores in the year to March, but the number flying in means we still had 24,000 more people living here overall. That number is low by historical standards and clips demand for housing.

Migration levels could also be pulled back in the longer term by shifting ideas about what is 'good' for New Zealand.

People saw what happened in John Key's 'rock star' economy of the mid 2010s. House prices blew out to around ten times average household incomes, built off the back of near-record migration. Stats NZ data shows annual net migration moved to sustained levels of 60,000 a year in the 2015-2017 period.

New housing supply just didn't keep up thanks mainly to planning rules.

But the extremities of that period now appear to be over; both major political parties have shifted from talking mainly about headline migrant numbers to words like “sustainability”, skills, and labour‑market fit. Read: fewer people coming here to live. Lower demand for housing.

Interest rates

Through the 2010s, the Reserve Bank steadily lowered the Official Cash Rate from about 3% at the start of the decade to a then record low of 1% by 2019.

Hell, by 2021 in the post-Covid cluster, the fixed one-year rate I was paying was 2.25%. Yes, 2.25%.

But Reserve Bank research in 2022 found falling long‑term interest rates have been a key driver of worsening affordability over recent decades, by allowing people to take out bigger and bigger mortgages relative to their incomes.

In 2021, the year house prices got to all-time highs, the Government changed the Reserve Bank’s mandate so it has to consider house prices when setting interest rates.

In 2024, more Reserve Bank policy changes restricted how much people could borrow relative to their income.

Cheap money used to be one of the foundations of the property market. Now that intent has shifted. If mortgages settle into a new-normal on slightly higher rates, buyers simply can't borrow as much, no matter how much they'd like to. Less borrowing power = less borrowing = lower house prices.

In the shorter term, interest rates are going up too, with the first OCR lift under the Reserve Bank’s belt, and more likely on the way.

There’s a limit to what people can actually pay for a house

Even though house prices are about 17% below their Covid-era peak, they're still roughly 20 to 25% higher than they were before the pandemic.

The latest figures show that someone buying today would spend around 40% of their household income servicing a mortgage. In Auckland, where the country's biggest concentration of young people are trying to build a life, it's closer to 47%.

The average age of first home ownership has risen from 34 years old in 2019, to 36 today. It’s 37 in Auckland. There's only so much people can afford to pay.

The change becomes even clearer when you look back.

In 1990, a typical house cost about $130,000 in Christchurch and just under $190,000 in Auckland. If prices had simply tracked inflation since then, that Auckland house would now be worth somewhere in the low to mid-$400,000s. Instead, the median price is more than $1 million today.

There’s a growing political consensus that we can’t do that again.

How the politics has shifted

In a 2024 media conference, Housing Minister Chris Bishop was asked whether he wanted house prices to fall.

He answered: “Yes, housing is too expensive in New Zealand… the flip side of house prices falling for people who own homes is that they become more affordable for people who don’t own homes. There is a whole generation of young New Zealanders who have been locked out of the housing market because average house prices are too high.”

He told RNZ’s Checkpoint he set a long‑term target of house prices being three to five times household incomes and said he wanted prices to “moderate over time” rather than “crash tomorrow.”

To some it was an extraordinary thing to hear from a centre-right government. As of March, the average house still cost more than seven times the annual median household income. By Bishop’s own standards, there’s a ways to go.

Ten years ago, governments were judged by whether people felt wealthier as their houses went up in value. Now ministers openly talk about improving affordability.

Labour has also bitten the bullet and is campaigning on bringing a 28% capital gains tax on investment properties, to dampen demand and prices. Again, unimaginable ten years ago.

There is also a growing school of bi-partisan thought that we’d all be better off if we invested in infrastructure and businesses.

As former Reserve Bank Governor Graeme Wheeler put it: “..much of our investment goes into housing, rather than more productivity‑promoting investment.”

Supply is tracking up

Quite a big topic with a lot of nuance - but essentially supply is improving.

The lowest annual amount of new home consents was 13,500 in mid 2011 following the GFC, according to independent economist Tony Alexander.

This year, there were nearly 40,000 new homes consented in New Zealand in the year ended May, up 19% compared with the year before, according to Stats NZ's latest data.

At the same time, Bishop and the Government are pushing councils to unlock more land for housing around major transport routes closer to city centres.

This change curbs house price growth because buyers have more options.

What happens next?

None of this means house prices can't ever rise. They'll still move up and down with interest rates, the economy and confidence. ANZ expects prices to fall slightly over the rest of this year, while Kiwibank expects a slight increase.

But when you look at migration, interest rates, planning rules for new builds, and even political rhetoric, it looks like we won’t see another decades-long period where house prices leave inflation, wages and the rest of the economy in the dust.

And “House prices double in a decade” is a headline we likely won’t see again.

If you have a property story or question, whether uplifting or challenging, email Stuff’s chief property correspondent Janika ter Ellen: janika.terellen@stuffdigital.co.nz or fill out the form below.