Source: ASB Bank
September 2026
Jane Turner
Senior Economist
ASB Economics
Rising interest rates dull housing confidence
ASB Housing Confidence Survey
Net percent who believe (3 months to July 2026) …
| Region | Good time to buy a house | House prices will increase | Interest rates will increase |
|---|---|---|---|
| Auckland | 26% | 4% | 54% |
| Rest of North Island | 19% | 6% | 61% |
| Canterbury | 11% | 23% | 53% |
| Rest of South Island | 14% | 18% | 61% |
| TOTAL NZ | 20% | 9% | 57% |
| Compare 3 months to April 2026 | 20% | 19% | 48% |
Source: Camorra
Good Time to Buy (percent)
Series: Unsure; Neither; Good; Bad.
Source: Macrobond, ASB
House price expectations continued to fall in the three months to July, with net 9% of respondents expecting prices to increase. This is down from a summer peak of net 30% expecting prices to increase (three months to January). Although net house price expectations are down, they remain close to average levels and are consistent with relatively balanced housing market conditions – with house prices largely trending sideways. We cannot rule out a small fall in house prices over the coming months but expect house prices to firm from 2027.
Buying sentiment was unchanged in the three months to July, which remains firm with net 20% feeling now is a good time to buy. Buying sentiment has been consistently positive since late 2024. Availability of choice remains a key factor underpinning home buying sentiment.
Interest rate expectations lifted again in the three months to July, with net 57% expecting borrowing rates to rise over the coming year. Respondents have increasingly anticipated that the Reserve Bank of New Zealand (RBNZ) would commence a tightening cycle this year, following the outbreak of conflict in the Middle East and subsequent increase in inflation. The breakdown in responses show there is minimal doubt over the direction of interest rates – 62% of respondents expect borrowing rates to be higher in one year’s time, while 14% expect interest rates to remain unchanged.
The RBNZ increased the Official Cash Rate (OCR) by 25 basis points in early July – and we expect the RBNZ to lift the OCR to 3.25% by the end of the year (although we see the risks skewed to fewer OCR increases if domestic demand indicators remain sluggish). Fixed-term mortgage rates have been lifting since the start of the year in anticipation of the RBNZ’s tightening cycle.
Reserve Bank makes its move
Interest Rate Expectations (net percentage)
Long-term average.
Series: New Zealand, Interest rate expectations Total*100.
Source: Macrobond, ASB
Interest rate expectations lifted again in the three months to July with net 57% expecting interest rates to lift, compared to net 48% expecting an increase in the three months to April. The lift in interest rate expectations follows growing anticipation of Official Cash Rate (OCR) increases from the Reserve Bank of New Zealand (RBNZ) and follows lifts in longer-term fixed mortgage rates over the first half of 2026.
The breakdown in responses show there is minimal doubt over the direction of interest rates – just 5% of respondents expect interest rates to fall over the coming year, confirming most anticipate we are past the lows for interest rates. 62% of respondents expect borrowing rates to be higher in one year’s time, and 14% expect interest rates to remain unchanged.
Since the outbreak of conflict in the Middle East in late February and the subsequent surge in fuel prices and inflation forecasts, it has largely been a question of when would the RBNZ would start to lift interest rates rather than if.
The Reserve Bank of New Zealand commenced its tightening cycle with a 25-basis point lift in the OCR in early July. By hiking in July the RBNZ has demonstrated its focus on keeping inflation expectations anchored. We expect the RBNZ will remain pro-active and hike the OCR 25 basis points at each remaining meeting this year – bringing the OCR to 3.25% by the end of the year (a total of 100bp increase).
With inflation likely to peak lower than initially feared and the RBNZ’s proactive response, we believe the OCR will peak at 3.25% – which is currently less than what financial market participants are expecting. While we have penciled in a 25-basis point OCR hike at each RBNZ meeting for the remainder of this year, we feel risks are skewed to a more gradual pace – with the potential for the RBNZ opting to pause at some point – particularly if domestic demand indicators remain sluggish.
In anticipation of the OCR increasing over 2026, mortgage rates had already started to lift through the first half of 2026 – particularly the longer-term fixed rates. The average 2-year fixed term mortgage rate (as reported by the RBNZ) has increased by 41 basis points since January, while the 1-year mortgage rate has increased by 21 basis points since January. More discussion on mortgage rates can be found in our home loan rate report.
https://www.asb.co.nz/documents/economic-research/home-loan-rate-report.html
Interest rate expectations are at the highest level since April 2023 (net 59%). During the 2021-2023 tightening cycle, net interest rate expectations peaked at 81% – with 84% of respondents expecting an increase (in the three months to July 2022).
House price expectations: optimism wanes
House Price Expectations (net percent)
Long-term average.
Source: Macrobond, ASB
House price expectations continued to fall in the three months to July 2026, with just net 9% expecting house prices to increase. House price expectations have fallen from summer highs – where net 30% of respondents (surveyed three months to January) expected house prices to increase.
House price expectations have returned to their lowest level since July 2023 (when net 8% expected house prices to decline). During 2022 and 2023, as the RBNZ lifted interest rates to combat post-COVID inflation pressures, house price expectations reached a low of net 43% expecting house prices to fall.
Although net house price expectations are down, they remain close to average levels and remain consistent with relatively balanced housing market conditions – with house prices largely trending sideways.
A closer look at the breakdown of responses highlights the high degree of uncertainty around the housing market over the coming year. 15% replied don’t know – which is the highest since 2019 (when the housing market was also relatively flat). Uncertainty around the Middle East conflict, and the implications for fuel prices and interest rates have likely spilled over into housing confidence.
Most respondents expect house prices to remain largely unchanged over the next year (39%) while the next largest group were still optimistic of house prices increasing (27%). Only 19% of respondents are expecting outright declines in house prices.
House price expectations fell across the country over the three months to July, but falls were largest in Auckland and the rest of the North Island. Net house price expectations for Auckland and the rest of the North Island sit at 4% and 6% respectively, while the South Island’s housing market remains warmer with net house price expectations for Canterbury and the Rest of the South Island at 23% and 18% respectively. For more discussion on the South Island’s strong economic performance – see our latest regional scoreboard.
https://www.asb.co.nz/documents/economic-research/regional-economic-scoreboard.html
We expect the housing market to remain subdued over the rest of 2026. The Reserve Bank’s OCR hike in July demonstrated its resolve to keep inflation pressures in check. Rising mortgage rates, ongoing cost of living pressures and a weak labour market will generate headwinds for the housing market through the rest of 2026. We cannot rule out a fall in house prices over the coming months. However, we expect economic conditions to improve toward the end of the year and we have penciled in recovery in house prices through 2027 – supported by a recovery in disposable income and a lift in population growth.
Still a buyers market
Good Time to Buy (net percentage)
Long-term average.
Series: New Zealand, Good time to buy Total.
Source: Macrobond, ASB
Net 20% felt it was a good time to buy in the three months to July – unchanged from the previous quarter’s results. Buying sentiment has been consistently positive since late 2024, with 2025 seeing the strongest buying sentiment since the period following the Global Financial Crisis. While higher mortgage rates and the higher cost of living are expected to impact affordability – it appears that availability of choice remains a key factor underpinning home buying sentiment.
Housing demand has dropped since March, with house sales falling to the lowest level in 2 years in July (on a seasonally-adjusted basis). With the drop in demand, inventory (the number of houses available on the market) has edged higher (on a seasonally-adjusted basis) despite some offset from a pull back in new listings. The ample choice continues to allow buyers to take their time.
Buying sentiment remains the strongest in Auckland – where housing market conditions remain subdued. Over the past three months, sentiment improved in Auckland – with net 23% seeing it as a good time to buy in the three months to July, compared to net 20% in the previous survey.
Indeed, buying sentiment improved in all areas of NZ, except North Island excluding Auckland. Without further regional breakdown from the survey it is difficult to say why this was the case. However, looking at trends in days to sell there has been a fall in Northland (albeit from very high levels). Also looking at trends in total houses available for sale, housing inventory has not increased in Northland or Waikato – suggesting market conditions have not slowed as much in these regions and as a result, we have not seen an improvement in buyer choice in these regions.
48% of respondents were neutral on housing market buying conditions, feeling it was neither a good or bad time to buy in the three months to July. This was a slight tick down from the previous survey (50%) while the number who felt it was a good time to buy lifted to 29% from 27%.
Looking ahead, we expect the housing market to remain skewed in favour of buyers through the second half of 2026. Demand is likely to remain muted due to rising mortgage rates, cost of living pressures and a slow recovery in the labour market. Furthermore, residential consents have lifted strongly over the past 6 months which suggests there could be a strong pipeline of new housing construction adding to buyer choice. Looking beyond 2026, we are expecting to see a recovery in net immigration as departures to Australia slow. Stronger population growth and an improvement in labour market conditions will likely support a recovery in buyer demand and potentially tighten housing market conditions.
The Details
House Price Expectations (percent)
Series: Unsure; Unchanged; Increase; Decrease.
Source: Macrobond, ASB
House Price Expectations Regional Split (net expectations)
Series: NZ; Rest of South Island; Rest of North Island; Canterbury; Auckland.
Source: Macrobond, ASB
Interest Rate Expectations Regional Split (net expectations)
Series: Rest of South Island; Rest of North Island; Canterbury; Auckland.
Source: Macrobond, ASB
Good Time to Buy Regional Split (net percentage)
Series: Rest of South Island; Rest of North Island; Canterbury; Auckland.
Source: Macrobond, ASB
Interest Rate Expectations and House Price Expectations (net expectations)
Series: House price expectations, lhs; Interest rate expectations, rhs.
Source: Macrobond, ASB
Interest Rate Expectations (percent)
Series: Unsure; Unchanged; Increase; Decrease.
Source: Macrobond, ASB
Appendix
Housing Confidence Survey is conducted every three months by ASB Bank since July 1996.
We ask respondents about their expectations for house prices and interest rates over the next 12 months, and if it is a good time to buy a property.
This quarter, from May to July 2026, 2929 respondents from Auckland, other parts of North Island, Canterbury, and other parts of South Island participated in our survey.
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