Sales fall across every region as buyers retreat from rising rates
ANZ expects the Reserve Bank (RBNZ) to lift the official cash rate (OCR) three more times as higher borrowing costs cool a housing market already losing momentum. The forecast comes in its September 2026 Property Focus report.
The bank's economists expect a 25-basis-point increase in October, a pause in December with the OCR at 3%, and then two further hikes in February and March 2027, taking it to a peak of 3.5%.
For property, the outlook is subdued. ANZ's view is blunt: "House prices are likely to go nowhere fast over the next year." It forecasts average prices to end 2026 about 1% below where they started the year, before a modest 2% rise in 2027.
Buyers step back across the regions
ANZ said the rate climb was the main cause of the slowdown. Election uncertainty and the latest oil price shock have likely played a supporting role.
August's seasonally adjusted sales figure was the weakest since 2024, capping a year of declines across every region. Prices are also starting to respond. The seasonally adjusted REINZ house price index has fallen slightly in four of the past five months, and ANZ estimates average prices are now slipping by roughly 0.5% a quarter.
Wellington remains the weakest market, with declines accelerating since March amid tighter monetary settings and the prospect of further public sector cuts flagged in budget 2026. Auckland and the rest of the North Island are showing signs of further softness. Other gauges are weakening too. Stock is sitting on the market longer, listings are accumulating in most regions, and auction results signal little near-term price growth.
Those still in the market are adjusting their plans. Cotality's latest consumer sentiment survey of New Zealand buyers, found 68% would take a smaller mortgage to improve affordability, the highest of five markets surveyed.
Policy is another factor. For advisers with investor clients, ANZ noted that Labour's pledge not to reintroduce limits on rental interest deductibility may ease some concern. The party's proposed capital gains tax, which would exclude the family home, remains a downside risk to prices.
Fixing decisions get harder
Most mortgage rates rose over the month, with the median floating rate up 25 basis points in line with the RBNZ's 2 September hike. The two-year rate was the exception, with several banks offering it as a special.
ANZ said that, with short-term rates likely to keep rising, the two-year term has some appeal. But it cautioned that locking in means giving up cheaper six-month and one-year rates now, which not every household can afford.
The bank suggested a mix of terms may suit some borrowers, noting that "certainty and flexibility are not of a fixed value."
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
