The housing market started the year with "a fizzle," according to ANZ New Zealand's economists, and they aren't expecting it to get much better.
"House prices have had a soft start to the year and continue to show little momentum," their latest Property Focus report says.
"While the broader economy is turning the corner, with high-frequency activity indicators robust, consumer confidence normalising and net migration tentatively rising from its low point, this is being offset by strong housing supply, the prospect that the next move in the Official Cash Rate is up rather than down and uncertainty arising from the election later this year," the report said.
"Longer term mortgage rates are still high relative to rental yields, suggesting little impetus for prices to rise," it said.
"Overall, despite an improving economic backdrop, 2026 looks set to be another year of little movement in house prices."
ANZ is NZ's biggest home lender. As of September 30 last year, ANZ had total housing loans of almost $114 billion, and total assets of $210 billion.
Last month ANZ's economists revised down their forecast for 2026 house price inflation to 2% from 5%, and they believe it could go even lower.
"It hasn't taken long for the data to confirm that house prices are going nowhere fast," the report said.
"It's early in the year and a lot could yet happen, but at this stage the balance of probabilities is tilting towards an even lower rate of house price inflation than we have pencilled in," the report said, noting the Reserve Bank forecast last week that house prices would be flat this year.
On the mortgage interest rate front, the report suggested borrowers looking to refix their loan could consider fixing for a short term and then looking to refix for a longer term later this year.
"Given our, and the Reserve Bank's expectation that the OCR will likely rise late this year, the idea of fixing for six months with a view to re-fixing when that term expires may appeal to some borrowers," the report said.
But that came with a warning.
"While we do see some merit in that, we would warn that this could be a risky strategy if the recovery gathers pace and rates thus go up sooner," ANZ's economists said.
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4 Comments
Any bank forecasting housing gains in 2026, is self -Interested DELUSION.
Not happening, sorry spruiker.
When interpreting bank led property forecasts, we need to read between the lines of their institutional bias.
A flat projection from a lender whose business model relies on mortgage demand is a polite way of suggesting a market contraction. Their own track record proves this, and no mentions of a bottom in this release.
Regardless, with CPI at 3.1%, a nominal price freeze is still a real value decline.
I have just re-fixed for 2 years (beginning mid April) at 4.69%. I think the 2 year rate offers the best value at the moment. While it's tempting to go with a shorter term at around 4.5%, I think most rates will be north of 5% by Christmas and perhaps in the mid-late 5s by Winter 2027. Fixing beyond 2 years is a little risky IMO, as it's difficult to know what our economy (and the broader International economy) will be doing in 2028 and beyond. Looking beyond 2028, I think imported deflation will pick up, thanks to the ongoing electrification of our industrial and transport sectors. Advances in robotics will also bring about an age of abundance and hyper-productivity while also lowering inflation. As fossil fuels lose their dominance in the world economy and renewables take over, energy shocks will become a thing of the past, further lowering inflation.
Anything fixed at below historical low of 5% has gotta be good. The deep lows seen during Covid were and extreme anomaly.
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