The Reserve Bank of New Zealand has reduced the official cash rate (OCR) by 3.25% since mid-2024, which has driven a sharp decline in mortgage rates to around pre-pandemic levels and a significant improvement in mortgage affordability:
Chart from Justin Fabo at Antipodean Macro
Normally, such a sharp reduction in mortgage rates would deliver a strong rebound in home values. However, no such rebound has eventuated.
The latest house price index from the Real Estate Institute of New Zealand (REINZ) revealed that values fell by 0.6% compared to December and were down 0.7% compared to January last year.
The REINZ HPI is now down 16.2% from its previous market peak in early 2022. And when adjusted for CPI inflation, New Zealand home values have crashed by more than 30% back to 2019 levels:
Chart from Justin Fabo at Antipodean Macro
The REINZ also reported a sharp reduction in the number of property sales. There were only 3837 residential sales across the nation in January 2026, down 5.4% from January last year.
At the same time, the stock of properties listed for sale increased by 2.3% from January 2025 to 33,149.
A sharp slowing in population growth is behind the weaker housing market conditions, despite improving mortgage affordability.
New Zealand’s net migration fell to its lowest level in more than a decade, excluding the COVID-19 pandemic, as arrivals slowed and Kiwis sought better opportunities in Australia.
In 2025, New Zealand registered a net migration gain of only 14,200, down 9,600 from the previous year.
This was a stark contrast to a record net gain of 135,500 in the year ended October 2023 and less than half the yearly average of 30,600 during the previous 25 years.
As a result, New Zealand’s population growth is tracking well below new dwelling supply, contributing to a surplus of homes that is placing downward pressure on prices and rents.
Chart from Justin Fabo at Antipodean Macro
Median rents in newly lodged rental bonds have outright declined across New Zealand:
Chart from Justin Fabo at Antipodean Macro
The stock of rents, as measured by the CPI rents, has also experienced a sharp slowing of growth:
Chart from Justin Fabo at Antipodean Macro
The upshot is that housing affordability in New Zealand is rapidly improving courtesy of falling immigration, house prices, rents, and mortgage rates.
Regrettably, the same things cannot be said for Australia, where home prices, rents, and mortgage rates are all on the rise and immigration remains historically strong.
