Housing affordability in New Zealand has reached its best level in nearly a decade, though the improvement isn’t being felt uniformly across the country, according to data released by Cotality.
The national median house value fell to 7.2 times the annual median household income at the complete of last year. While still above the long-term average of 6.8, this represents the lowest ratio since 2016, when it stood at 7. A brief dip to 7.2 was recorded in 2019.
Cotality chief property economist Kelvin Davidson noted that house prices have been largely flat or declining for the past two years, currently sitting 18 percent below their peak. “We’ve had incomes head up over that period and, in the last couple of years since sort of mid-24, interest rates have approach down too,” he said. “Across all of those measures there’s been a pretty big improvement.”
The share of income required to cover mortgage repayments has also decreased, returning to its long-term average. “So, not saying housing is cheap or anything, it’s certainly not, it’s still a challenge to get into the market, but when you look at that measure it’s pretty much back to normal,” Davidson explained. He likened the situation to a “handbrake” on affordability being released, though not necessarily accelerating price growth. “It doesn’t necessarily indicate we’re going to go straight into a new boom for house prices or anything, but maybe that restraint that has been there is not so much a factor anymore.”
Regional disparities remain significant. Tauranga is currently the least affordable main centre, with a house price-to-income ratio of 8.5. Auckland follows at 7.5, though This represents lower than its historical standard. Wellington is the most affordable of the main centres, at 6.4. Outside of the major cities, Thames Coromandel (14.5) and Queenstown Lakes (16.1) are the least affordable areas, with Kaikoura also recording a double-digit ratio of 10.6. In contrast, Clutha and Grey are the most affordable regions, at 4.6.
Falling interest rates have contributed to the improved affordability, bringing the share of income needed for home loan repayments down to 42 percent, aligning with the long-term average. Mortgage payments as a share of income are now below average in Auckland, Wellington and Tauranga.
Despite the improvements, Davidson cautioned that purchasing a home remains challenging. “I suspect more people would be out there at the moment thinking ‘yeah it’s not cheap, but I can make it work’,” he said. “Across all measures now I think you’d probably call it relatively normal.”
However, the positive trend isn’t universal. Areas like Invercargill have not experienced the same level of affordability improvement. Queenstown Lakes remains a significant outlier. “Queenstown’s a sort of market on its own really,” Davidson stated. “It’s more about wealth and how much equity you’re bringing in from other parts of the country.”
Davidson emphasized the ongoing need for increased housing supply to maintain affordability. The average time to save a house deposit currently stands at 9.6 years, slightly above the long-term average of nine years, but down from a peak of 13.4 years. Wellington boasts the shortest deposit-saving timeframe at 8.5 years, while Auckland’s 10 years is below its long-term average of 10.2 years.
Rental costs also remain a concern. Rents currently consume 27.9 percent of gross household income nationwide, exceeding the long-term average of 25.8 percent, although this is an improvement from 2025 levels. “Although the situation has got better for renters in the past year or so, it remains testing,” Davidson said. He added that households with incomes below the median may face even greater challenges.
Davidson does not anticipate a rapid escalation in house prices. “It’s probably going to be a period where perhaps house prices are rising only modestly and are tied more closely to household incomes, which is what debt-to-income ratio restrictions are meant to do,” he said. He suggested a period of moderate price increases coupled with income growth, stabilizing affordability measures. “We’ll probably see a period where house prices do sneak up a bit but incomes rise too so some of these measures stay fairly stable.”
Davidson also noted a shift in public perception, with a growing acceptance that continually rising house prices are not necessarily desirable. “A period where values are flatter could be a pretty decent thing.”
