Three years sideways — but the depth of the fall is larger than it looks
New Zealand house prices have been broadly flat for three years, but a new analysis from BNZ chief economist Mike Jones (pictured) puts the scale of the preceding correction in sharper relief.
According to BNZ's June 2026 Eco-Pulse report, the REINZ House Price Index remains 15% below its November 2021 peak in nominal terms — and 28% below in real, inflation-adjusted terms, back to levels last seen in mid-2019.
The 2021–2023 decline was the largest on record across the five correction periods BNZ has identified since 1992 — immediately preceded by a 43% surge in the 18 months from May 2020 to November 2021. New Zealand is now 55 months into the current cycle. By comparison, it took 63 months for prices to reclaim their previous peak after the Global Financial Crisis correction.
The regional picture is sharply divided. Canterbury, Otago, and Southland have recovered all of their modest losses and made new nominal highs. Auckland and Wellington are at the other extreme — down 22% and 26% respectively from their 2021 peaks in nominal terms, and 35% and 40% in real terms.
The affordability silver lining — and its limits
Against that backdrop, there is one clear beneficiary of the prolonged correction. The sustained flat period has delivered a meaningful improvement in housing affordability.
BNZ's composite index — which combines a 20% deposit with first-year debt servicing costs expressed as a multiple of average household income — has returned to levels last seen in mid-2020. Lower house prices have reduced required deposits, incomes have risen, and mortgage rates have completed an up-then-down cycle.
"That doesn't necessarily imply houses are suddenly affordable outright, just that the overall situation has improved in recent years," Jones writes, adding that BNZ's forecasts for prices, incomes, and rates point to further modest gains in affordability ahead.
Globally, NZ valuations remain elevated — a signal for 2027
BNZ's global comparison is the most pointed section of the report for brokers advising clients on timing. While the UK, US, and particularly Australia have outperformed New Zealand on house prices over the past five years, NZ's real price gains since 2010 still sit at the upper end of comparable markets — which weakens the catch-up argument considerably.
That caution is not unique to BNZ. Cotality chief property economist Kelvin Davidson was already forecasting a flat or slightly negative full-year result for 2026, describing economic and interest rate conditions as unlikely to support a lasting rise in property values.
On the house price-to-rent ratio, NZ remains relatively high against US, UK, and Australian peers despite the recent correction. The house price-to-income ratio has retraced more sharply, returning to 2015 levels, though Jones cautions that base year selection significantly influences these comparisons. The Reserve Bank's own modelling also places current house prices above its indicative range of sustainable prices, albeit much less so than at the peak.
Jones is careful not to overstate the bearish case.
"None of this implies house prices need to fall further or can't lift from here," he writes, noting that house prices are cyclical and that supportive macro settings can drive upswings from stretched starting positions. But the analysis supports his "sense there's downside risk on our house price inflation forecasts for this calendar year (0%) and next (4.5%)" — a note of caution that adds useful context to any broker conversation about leverage and timing heading into 2027.
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