New Zealand Housing Market 2026: Outlook With OCR at 2.25%

As we enter 2026…

New Zealand’s housing market is shifting into a new phase—one shaped by significantly lower interest rates, cautious optimism among buyers, and a tight supply backdrop.

With the Reserve Bank (RBNZ) cutting the official cash rate (OCR) to 2.25% in November 2025 and mortgage rates dropping across the board, many potential buyers and investors are asking: Is this the time to re-enter the market?

This article examines what the data shows, forecasts what could happen across 2026, and outlines what different types of buyers should expect.

 

The Interest-Rate Reset: What’s Happening Now?

 

The borrowing landscape has changed dramatically compared to 2024. The RBNZ’s cut to 2.25% signaled a clear end to the tightening cycle, and lenders have responded aggressively.

 

Snapshot: Current NZ Mortgage Rates (Late 2025)

Rate TypeAverage / Typical OfferTrend
Official Cash Rate (OCR)2.25%Stable / Low
Floating / Variable~4.99%Dropped significantly
1-Year Fixed4.49% – 4.99%“Sweet spot” for competition
Special / New Customer~4.43% – 4.52%Aggressive discounting active

The Bottom Line: Today’s environment is much softer than the 7%+ stress-test era of 2023–24. While we aren’t seeing the sub-3% rates of the Covid boom, the current ~4.5% range significantly improves serviceability.

 

Why 2026 Will Be a “Soft Landing,” Not a Boom

 

2.1 Supply Remains Constrained

New-home consents over the past 12 months have remained well below the 2021 peak. Developers pulled back during the high-interest period, meaning new stock coming to market in 2026 is limited. Existing listings have also shrunk.

Result: As demand stirs, supply won’t respond immediately, creating a natural floor under prices.

 

2.2 Rates Are Reasonable, Not “Rock Bottom”

Fixed rates of 4.5–5% are healthy but still higher than the lows that fueled the pandemic frenzy. Buyers remain conservative about leverage.

 

2.3 Balanced Demand

  • First-Home Buyers (FHBs): 2026 may be the best window since 2021.
  • Investors: Expect returns based on yield, not short-term capital gains.
  • Upgraders: Likely to re-enter the market after sitting out 2024.

 

2026 Forecast: Three Scenarios

ScenarioProbabilityForecastNational Price Impact
Base CaseHighOCR ~2.25%, rates 4.5–5%, tight supply.+3% to +6%
UpsideModerateMore bank competition, migration surge.+7% to +10%
DownsideLowInflation or global shock lifts rates.Flat / 0%

Regional Outlook & Buyer Playbook

 

 

  • Auckland (West & South): Affordable suburbs likely lead FHB demand.
  • Wellington & Christchurch: Mid-single-digit growth expected.
  • Regions (Waikato, BOP): Stronger gains where supply is tightest.

 

The 2026 Playbook

 

  • First-Home Buyers: Best buying window since 2021.
  • Investors: Focus on yield and cash-flow-positive opportunities.
  • Upgraders: Safer to buy/sell in the same market conditions.

 

Frequently Asked Questions (FAQ)

 

Will NZ house prices rise in 2026?
Yes, forecasts suggest a modest rise of 3–6% due to the OCR dropping to 2.25% and tight supply.

What are mortgage rate projections for 2026?
Fixed rates are expected to remain in the 4.5–5.0% range, with occasional dips near 4.2%.

Is 2026 a good time to buy a house?
Yes—serviceability is better than in 2023–24, though buyers should still stress-test at 6% interest rates.

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