Source: Radio New Zealand
RNZ
New Zealand’s biggest bank says it’s unlikely that New Zealand will experience the same increases in house prices over the next 30 years, as it did over the last three decades.
ANZ’s economists have looked at what house prices might do into the longer-term future in their most recent property report.
They said, since 1992, according to the Real Estate Institute House Price Index, New Zealand house prices had grown an average annual rate of 6 percent a year up to 2025.
That was higher than seen in most other countries over the period – of “advanced economies” only Norway and Iceland have faster growth. Australia was just behind. Prices were running at a rate of 7.5 percent until the recent price falls.
It was also higher than in the previous decades.
ANZ’s economists said it was driven by a long-term downward trend in interest rates from the 1990s until 2021, per capita income growth, and slow housing supply.
But it was unlikely that those factors would add the same momentum to house prices in future.
Interest rates remained about 100 to 200 basis points lower than their average 2000s levels, even though the Covid trough had reversed out. Per capita income growth had started to struggle in recent years and population growth had slowed. The housing supply situation had also improved.
While there had been a drop in the number of homes consented compared to the 2022 peak, it had only fallen back to its long-term average rather than well below, as it did after GFC.
They said a 4 percent rate had been more typical internationally and would broadly match
“[We] think that a trend rate of increase closer to 4 percent per year is more likely. But as history shows, even if we are close to being right about that trend rate of increase, the path there will not be linear; there will likely be big ups and downs along the way.
“The next year is a good example of that – we expect the impact of the fuel price shock will see house prices fall around 2 percent over 2026. After that, our forecast has house prices increasing at 3 percent to 4 percent per year over 2027 and 2028.
“There are winners and losers from any price change, and house prices are no exception. A trend rate of increase of 4 percent per year would mean lower capital gains for homeowners in the coming decades than what’s occurred in the previous three decades. However, a slower upward trend would keep housing more affordable than otherwise for first-home buyers. That would support household financial resilience, access to home ownership, and a generally more balanced economy.”
Japan had experienced an average rate of decline of 0.6 percent a year since 1992.
“This serves as a warning that house prices can at times fall for a period as long as three decades. This is certainly not something we expect though – Japan’s experience is explained by a big housing bubble that peaked in 1991, followed by decades of economic stagnation, falling population growth (and since 2010 an outright declining population), and falling consumer prices.”
They said the rate of growth could be lower than 4 percent a year if global interest rates pushed up, the economy persistently struggled or there were more changes that lowered the cost of building, or tax changes that reduced housing’s attractiveness as an investment.
But prices could rise more quickly if interest rates fell again, there was a period of higher inflation or supply constraints re-emerged.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
Original source: https://nz.mil-osi.com/2026/05/20/nz-had-third-fastest-house-price-growth-in-the-world-for-years-biggest-bank-warns-it-probably-wont-continue/