Government data shows rare gains across all three affordability measures — for now
New Zealand first-home buyers and renters saw genuine affordability gains through 2025 — but two new government reports suggest those conditions are already becoming harder to sustain.
The Ministry of Housing and Urban Development published its December 2025 Change in Housing Affordability Indicators (CHAI) update alongside its March Quarter 2026 Housing Market Update.
The CHAI report noted it is "unusual to see both deposit affordability and mortgage serviceability improve at the same time" — a confluence driven by falling interest rates and softening house prices. That combination appears unlikely to persist.
What improved — and what's already changing
Through 2025, all three affordability measures moved in the right direction.
Rental affordability improved 3% nationally over the year to December 2025, though momentum slowed as rents fell less quickly. Deposit affordability improved 4% nationally as incomes grew 3% and house prices fell 1%. Mortgage serviceability held up across all regions. As the CHAI report put it: "the affordability gains are continuing, but the tailwinds are easing."
By early 2026, the March Quarter Housing Market Update confirms the shift. The RBNZ held the OCR at 2.25% in April but signalled a rise before year end. Annual inflation remained at 3.1% in the March quarter, unemployment rose to 5.4%, and mortgage rates have been rising since November 2025.
North and South telling different stories
Affordability gains played out differently across the two islands. In the North, falling house prices drove improvement — Wellington deposit affordability rose 12% as house prices fell 8%, and Auckland improved 7% as prices dropped 4%. In the South, house prices held up or rose, limiting gains despite income growth.
By March, that split had deepened. Southland house prices were up 7.9% annually, Canterbury up 3.7%, and Otago up 3.6%, while Auckland fell 1.2% and Wellington fell 1.8%. Active listings nationally reached a decade high of 37,500, supporting buyer choice but weighing on price momentum.
First-home buyers active — for now
First-home buyer activity remained strong in early 2026, with 51% of new FHB lending above 80% LVR and banks still well within their limits. Building consents rose 11.7% in the year to February 2026. However, 769 construction firms liquidated over the past year, and the quarterly update cautions that "any recovery in building activity is likely to be gradual and fragile."
That matters for supply — and supply matters for affordability. The CHAI report is clear on the downside risk: "if interest rates rise more than expected, we might see mortgage serviceability decline further."
With the RBNZ signalling rate increases before the end of 2026, the current window of improved affordability may be shorter than it looks.
For more information and insights, read the MHUD reports: Change in Housing Affordability Indicators (CHAI) update and New quarterly Housing Market Update.
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
