ANZ's economists are picking shorter term interest rates to go lower but warn the easing cycle won't last forever

ANZ's economists are picking house prices to remain flat for the rest of this year, but are anticipating a 5% increase next year.

ANZ's latest NZ Property Focus report says the usual spring housing market is underway, boosting activity and prices slightly, although underlying trends are little changed from the prevailing market conditions over the last 12 months.

"The flow of new listings and stock of inventories remains elevated, continuing to give buyers the upper hand," the economists say.

"We expect prices to remain broadly unchanged over the rest of 2025 as lingering headwinds from a weak labour market and high inventories keep prices in check," they say.

"However, the Official Cash Rate is headed lower, which will support the housing market and broader economy and as result, we anticipate house prices will rise 5% in 2026," ANZ's economists say.

They're still picking the OCR will be cut to 2.50% by November, down from 3% currently, but note there's a chance it could go even lower.

"That will please borrowers, even if the reason for it, a softer economy and indifferent housing market, may not!" ANZ says.

The economists say that will give borrowers more time to decide when to fix for longer, but also warn lower interest rates won't last forever.

"The easing cycle won't go on forever and we are mindful that global interest rates aren't falling, and that may slow falls in four and five year rates, even if we do see lower short term rates," they say in the report.

"We still see merit in spreading risk over several terms but expect further slight falls in short term rates as the OCR falls," ANZ's economists say.

ANZ is New Zealand's biggest housing lender with total loans of almost $113 billion as of June 30.