New Zealand experienced one of the biggest house price booms in the world during the pandemic.
However, since prices peaked in late 2021, values in real inflation-adjusted terms have plummeted by more than 30% to levels last seen in 2019, nearly six years ago.
Chart by Justin Fabo from Antipodean Macro
The latest house price results from the REINZ showed that home prices continue to deflate.
As illustrated below, New Zealand’s house price index fell by 0.6% in December to be 0.4% lower year-on-year:
The average asking price of residential properties listed on Trade Me Property also sank by $82,500 in November and December to its lowest level in 12 months.
The mild deflation of New Zealand housing values came at the same time as CPI inflation accelerated to 3.1% in 2025:
Chart by Justin Fabo from Antipodean Macro
As a result, New Zealand home values continued to deflate swiftly in real inflation-adjusted terms.
Major bank ASB summarised New Zealand’s housing market as follows:
“On an annual basis, house sales turnover ended 2025 marginally higher than in 2024, while house prices were slightly lower than a year earlier”.
“The housing market in 2025 followed a trajectory that differed from what many economists had forecast at the start of the year”.
“Despite 200bp of OCR cuts over 2025, which led to a substantial reduction in mortgage interest rates, the housing market has been slow to respond and has shown no significant improvement”.
“The ongoing imbalance between weak demand and strong supply remains the key factor causing house prices to trend sideways”.
Indeed, the ongoing weakness in New Zealand home prices comes despite sharply lower mortgage rates, which have fallen back to pre-pandemic levels:
Chart by Justin Fabo from Antipodean Macro
The combination of falling prices and mortgage rates has dramatically improved purchase affordability in New Zealand.
Meanwhile, the collapse of immigration into New Zealand has sent rental inflation plummeting, benefiting tenant households:
Chart by Justin Fabo from Antipodean Macro
The contrast with Australia, which still has historically high net overseas migration, could not be more stark.
Home prices and advertised rents continue to rise swiftly in Australia, whereas growth has plummeted in New Zealand.
As a result, New Zealand housing has become increasingly affordable to purchase or rent, whereas it remains historically unaffordable in Australia.
