New Zealand’s housing market is off to a “misfire” start! ANZ continues to lower its house price forecast and may continue to trade sideways in 2026

Reprinted from the public account: NZ Daily Finance

2026 has just begun, but the New Zealand real estate market has not seen any rebound.

According to the latest “Property Focus” report released by ANZ, New Zealand’s housing market started this year with a “fizzle” (soft), with almost no upward momentum in house prices, and this situation may continue throughout the year.

01

The economy is picking up, but housing prices are “unable to move”

“House prices have been weak at the start of the year, with little apparent upward momentum,” ANZ economists said.

This is in contrast to the expectations of many market participants at the beginning of the year. Originally, the market generally believed that as the economy gradually improves, real estate is expected to pick up.

Indeed, from a macro level, some positive signals have emerged:

• High-frequency economic activity indicators remain robust

• Consumer confidence is recovering

• Net migration starts to pick up from lows

But the problem is that these positive factors are offset by several real pressures:

1. Adequate supply of housing

2. The official cash rate (OCR) may rise next

3. Policy uncertainty brought about by the year-end election

4. Long-term mortgage rates remain higher than rental yields

Especially the last point is particularly critical – when mortgage interest rates are still relatively high relative to rental income, investors lack the motivation to enter the market, and housing prices will naturally find it difficult to improve.

ANZ bluntly said: “Despite the improving economic backdrop, 2026 is still likely to be a year with little significant movement in house prices.”

02

ANZ cuts forecast for house price growth

As New Zealand’s largest housing loan bank, ANZ’s judgment has strong market reference significance.

As of September 30 last year, ANZ’s total housing loans were nearly 114 billion New Zealand dollars, and its total assets were 210 billion New Zealand dollars.

Last month, ANZ changed its 2026 house price growth forecast from 5% reduced to 2%and said: house price growth may fall further.

The report even states: “The data quickly confirmed that home prices show little sign of rising.”

The Bank of New Zealand (RBNZ) also predicted in its latest monetary policy statement –House prices may remain flat this year。

At present, the probability of the market going sideways is increasing.

03

How to lock the mortgage interest rate?

In the current interest rate environment, ANZ has a strategic suggestion for borrowers who are preparing to re-lock their mortgage interest rates (refix):

You can consider locking the short-term interest rate for six months first and then re-fixing the long-term interest rate before the end of the year.

The reason is:

• Both ANZ and the Reserve Bank expect the OCR may be raised later this year.

• However, monetary conditions have eased in the short term

However, ANZ also warned that this strategy has risks:

If the economic recovery accelerates and interest rates rise early, borrowers may face higher costs.

In other words, this is a strategy of “gaining time lag”, but it requires bearing the risk of policy change.

04

Inflation pressure remains

Meanwhile, ANZ’s latest business outlook survey shows inflationary pressures are still rising.

Key data include:

• Proportion of companies expecting price increases in the next three months: 53%

• Proportion of companies expecting cost increases: 79% (highest since July 2023)

• Wage growth expectations are rising

ANZ chief economist Sharon Zollner pointed out: Business pricing willingness does not clearly support expectations of a rapid decline in inflation.

Although the overall CPI is expected to fall back to the central bank’s target range of 1%-3% in the March quarter (3.1% in December last year), and the central bank has repeatedly expressed “confidence” that inflation will return to 2%, behavioral data on the corporate side still shows a certain degree of stickiness.

“The economy often surprises forecasters and we remain open-minded,” she said frankly.

05

Business confidence remains strong, but construction industry under pressure

The business confidence index fell 5 points to 59 in February, but remains at a high level.

Overall:

• Economic activity indicators remain solid

• Manufacturing employment rebounds

• The construction industry has seen a significant decline

In addition, the dramatic changes in interest rates from the end of November last year to mid-February this year also had an impact on corporate profit expectations and credit conditions.

However, after the central bank’s recent push for moderate easing of monetary conditions, the market will focus on whether next month’s data stabilizes.

06

Where will the housing market go this year?

Taken together, the New Zealand real estate market is currently in a delicate balance:

• The economy is repairing

• Inflation remains under pressure

• Interest rate outlook is cautious

• Sufficient supply side

In this environment, housing prices lack significant impetus.

If inflation declines smoothly and OCR remains stable, the market may gradually pick up; but if inflation picks up again or interest rates rise ahead of schedule, the housing market may continue to maintain low volatility.

For buyers, now is a “rational window period”;
For investors, this is a stage where returns and risks need to be recalculated.

In 2026, there may be only one keyword for the New Zealand housing market:Stable, but lacking passion.

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