Investors turn cautious as rates rise and election tax risk looms
New Zealand's housing market softened through the middle of 2026, with sales volumes declining and average house prices edging lower, according to ANZ's latest Property Focus report. The bank still expects house prices to end the year down 2% year-on-year, with only a small rise forecast for 2027.
Investors pull back ahead of the election
ANZ, New Zealand's biggest home lender, with mortgage exposure of almost $119 billion as of March 31, said rising interest rates, election uncertainty, and the prospect of new housing taxes are weighing most heavily on investor demand.
"Investors in particular appear to have pulled back this year," the report said, pointing to the share of new mortgage lending going to investors dipping in February and staying subdued since.
The bank flagged the upcoming election as a key source of uncertainty for landlords, noting the Labour Party has committed to introducing a capital gains tax on residential property other than the family home if elected, and remains undecided on reinstating interest deductibility limits for investors. ANZ said the potential for a land tax, should a minor party favouring one enter Parliament, "may also be exercising investors' imaginations."
Sales volumes are down 6% year-on-year, which ANZ linked primarily to the recent turn upwards in mortgage rates, though the bank noted uncertainty from higher oil prices "could have had a chilling effect above and beyond its impact on interest rates."
Supply still outpacing demand
Listings have eased over recent months as some sellers hit pause, but not by as much as sales volumes have fallen, leaving buyers with more choice and tilting the market further in their favour. ANZ said this, combined with continued strong growth in housing supply relative to population-driven demand, is likely to keep house price pressures in check.
The bank expects the Reserve Bank to lift the official cash rate further from its current 2.5% to a neutral level of around 3%, a move it says has already been "well telegraphed" and is now widely expected by markets.
Regional divergence set to persist
ANZ's feature analysis found house prices in Auckland and Wellington have persistently underperformed the national average over the past five years, while much of the South Island has outperformed, driven partly by price convergence and shifting regional economic fortunes. The bank said Auckland's prices are now "reaching the low end of their typical range" relative to incomes, giving scope for stabilisation as the economic recovery broadens, while Wellington faces continued pressure from public sector downsizing.
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