Falling mortgage repayments and easing rents give buyers and tenants room to breathe
Housing affordability across New Zealand has swung back to its long-term average, according to Cotality's latest Housing Affordability Report, as a sustained run of softer property values, easing mortgage rates and rising household incomes unwinds much of the strain built up since the pandemic.
Main centres diverge, with Auckland and Wellington leading gains
The recovery hasn't been even across the country.
Auckland's value-to-income ratio has fallen to 7.2, below its historical benchmark of 7.5, while Wellington now holds the lowest ratio of any main centre at 5.5, well under its own average of 6.2. Tauranga has also improved substantially, though it remains the least affordable of the main centres in absolute terms.
By contrast, Christchurch (6.7 versus a typical 6.0) and Dunedin (6.1 versus 5.7) have seen more modest gains, as property values in both cities proved more resilient through the downturn.
Kelvin Davidson (pictured), Cotality NZ chief property economist, said the pattern reflects how unevenly the market has adjusted.
"Markets such as Auckland, Tauranga and Wellington haven't necessarily become inexpensive, but after several years of softer property values, they're more affordable than they've been for many years,” Davidson said. “By contrast, Christchurch and Dunedin have held onto more of their earlier price growth. That's good news for existing homeowners, but it also means affordability hasn't improved to the same extent as we've seen elsewhere."
Beyond the main centres, Whangārei, Kāpiti Coast and Nelson currently sit below their own long-term value-to-income and deposit-saving averages, while Gisborne, Hastings, Napier, and Palmerston North sit close to their historical benchmarks.
Queenstown and Invercargill remain among the country's most stretched markets for owner-occupiers, and rental affordability continues to bite in many provincial centres, with Gisborne — despite sitting close to average on the ownership measures above — among the most stretched on rents, alongside Whanganui.
Every major affordability measure improves nationally
The national value-to-income ratio fell to 6.7 in the June 2026 quarter, matching its 2004-26 benchmark and down sharply from the peak of 9.8 in late 2021. The typical time needed to save a 20% deposit eased to 8.9 years, a touch below the norm of nine years and well short of the cyclical peak of 13.1 years reached in late 2021.
Davidson said the shift reflected several factors moving in borrowers' favour at once.
"Mortgage rates remain well below their recent peaks, property values are still below their highs, and household incomes have continued to rise,” he said. “The combination of those factors has restored housing affordability to much more normal levels across New Zealand. Buying a home will always be challenging, particularly for first-home buyers saving a deposit, but affordability is no longer the handbrake that it was four or five years ago."
Mortgage repayments, arguably the most immediate measure for borrowers, tell a similar story. The share of gross household income required to service a new 80% LVR mortgage fell to 40% nationally, below the typical 42% and well down from the 54% peak recorded in late 2021.
Renters have also benefited, with median rents now absorbing 25.5% of household income, in line with historical norms and the most favourable rental affordability in almost a decade.
Davidson cautioned that the improvement isn't universal for tenants.
"It's important to recognise that some tenants will be paying typical rents but not earning an average income. This will make renting more difficult for them than these headline numbers suggest," he said.
Improved affordability unlikely to reignite rapid price growth
Davidson said better affordability shouldn't be read as a signal that rapid house price growth is about to return, though it does suggest the scope for further significant price falls has narrowed.
He said keeping affordability at current levels over the long term hinges on supply.
"Trying to keep housing affordability around its long-term position is not just about easing mortgage rates and weaker house prices, it requires an adequate supply response for new dwellings,” Davidson said. “The news there looks encouraging, with the government currently pushing a wide range of measures aimed at increasing housing supply, but that takes time and patience."
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