Economists from ANZ New Zealand, the country's biggest bank and biggest home lender, are cutting their forecast for annual house price growth.
"Weighing up the economic recovery, higher interest rates, the lack of near-term momentum in the housing market, and election-related uncertainty, we have reduced our house price inflation forecast for 2026 from 5% to 2%. We have kept our house price inflation forecast for 2027 unchanged at 4.5%, which would see it broadly match income growth," ANZ NZ's Sharon Zollner, Matthew Galt and David Croy say in a new report.
They note house prices have been flat for three years, and there's "clear evidence" the economy improved in late 2025, which will be a tailwind for the housing market.
"However, house prices are starting 2026 with little momentum, and uncertainty from the upcoming [November 7] election – including the prospect of a capital gains tax [if Labour win] – may keep some buyers on the sidelines this year."
"Moreover, the Official Cash Rate [OCR] looks set to rise sooner rather than later after growth and inflation have both come in hotter than the Reserve Bank expected," Zollner, Galt and Croy say.
Following Friday's release of the December quarter Consumers Price Index, showing annual inflation of 3.1%, the ANZ NZ economists have brought forward their expectation for the first OCR hike, from its current 2.25%, to December 2026 from February 2027.
"As OCR hikes draw closer, mortgage rates are shifting from a tailwind to a headwind for the housing market. Weighing it all up, we have reduced our house price inflation forecast for 2026 to 2% from 5% previously."
As of September 30 last year, ANZ NZ had total housing loans of almost $114 billion, and total assets of $210 billion.
Zollner, Galt and Croy say average nationwide house prices are showing little sign of breaking away from a three-year flat trend, with the Real Estate Institute of New Zealand House Price Index down 0.1% from a year ago, on a seasonally adjusted and three month moving average basis.
"Indicators of the balance between demand and supply suggest prices will continue to be flat through the early part of 2026. The ratio of sales to inventories is a useful indicator of heat in the housing market and tends to give a three to six month lead on house price momentum. It is flat as a pancake, suggesting prices will be too."
They also note median days to sell has been stuck at 45 days through October, November and December, which is above the long-run average of 40, signalling a market still tilted in favour of buyers.
"The weekly auction clearance rate also points to quite a balanced market, signalling little movement in prices either up or down in the next few months," the ANZ NZ economists say.
"Rising demand has been met with plenty of listings of new property for sale, helping to keep price pressures in check. Inventories of property for sale have oscillated around a 10-year high for over a year now."
"One factor supporting the number of listings has been resilient house-building activity through this economic downturn. While there has been a steep drop-off in the number of homes consented from its 2022 peak, the number of consents per capita has only dropped down to its long-term average, rather than dropping well below, as it did after 2008. In the past few months, consents have increased in response to lower interest rates, which will further support the supply of new housing over 2026," the ANZ NZ economists say.
A further factor keeping house prices in check is low net migration.
"Net migration is likely to increase as the labour market recovers, but it may only be gradual given ongoing strength in the Australian job market. The unemployment rate in Australia is currently 4.1%, versus over 5% here."
In terms of the potential for a new capital gains tax, the ANZ NZ economists say there were some signs property investors pulled back in earlier times a capital gains tax was proposed by politicians, such as 2014 and 2017-2019.
"The impact wasn’t large – not enough to disentangle from the bigger macroeconomic drivers of the housing market – and prices rose by around 2% to 8% per year during those windows. But debate about a capital gains tax may well restrain housing market activity somewhat until the policy landscape becomes clearer," Zollner, Galt and Croy say.
In terms of their forecast for an OCR increase in December, they note with a lot of water to flow under the bridge before then, there's "every chance" the first OCR hike could come either earlier or later than December.
*The charts below come from ANZ NZ.
10 Comments
Was it 7% growth forecast at the start of last year, and the year before that?
2% growth forecast now with inflation running higher than that, will likely see how prices fall again in real inflation adjusted terms this year. Better future buying opportunities await those willing to be patient.
No rush to buy folks.
Most wage rises will be lower than 3% this year... probably nothing
And I will have $1 each way on ocr moves please.
Yep, and now with interest rates looking to increase, an election year with a possible capital gains tax that they think is a drag on price increases they expect house prices to do better than last year? Just talking their book up.
ANZ once again make far too overly optimistic public predictions of house price growth in the face of all their brilliant data showing otherwise late 2025, only to finally revise soon after to less than 1/3 of their confident prediction. Translation: Banks try to influence potential buyers to take on ever greater debt, for the sake of their own profits and bonuses.
ANZ once again make far too overly optimistic public predictions of house price growth
Propaganda dressed up as research
Come on ANZ, we're still in January, could have waited a bit. Positive growth in 2026 looks really compromised: stock is still high, banks are already raising rates, inflation above the top of the band, low immigration...
Auckland is down 19% from peak over 4 years and yet none of the majors have predicted a single falling year....
Even blind Freddi can see this release from ANZ REALLY signals yet another year of falls, but they cannot be that direct. So a 2% rise it is then.
The All Blacks have more chance of winning RWC 27 then house prices rising, and that's paying 5:1
I just don't understand how these people keep their jobs. But I guess they're really a marketing department rather than actual economic analysts/forecasters.
It'd be interesting if one of the journos from this site would hit them up on their track record of predictions and ask how they justify the current one based on past performances.
Not surprised. 5% seemed way too optimistic.
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