Confidence in New Zealand’s housing market has lifted sharply this quarter, with an increasing proportion of Kiwi expecting house prices to rise over the next year, despite growing expectations that interest rates will increase.
In ASB’s latest Housing Confidence Survey, a net 30% of respondents now expect house prices to increase over the next 12 months, up from 17% in the previous quarter. Buying sentiment remains high and broadly unchanged, with a net 27% of respondents saying now is a good time to buy a home – well above the long‑term average.
What’s driving the shift?
ASB Chief Economist Nick Tuffley says the results suggest confidence that the housing market has moved past its weakest point is building, even if a strong price upswing is unlikely.
“House price expectations have clearly rebounded after a soft patch through 2025,” Nick says. “However, high levels of housing supply and only moderate demand are likely to keep price increases relatively subdued through the first half of 2026.”
At the same time, households are considering the interest rate outlook.
“With inflation ending 2025 above the Reserve Bank’s target band and mortgage rates already edging higher, people are now anticipating further increases this year,” Nick says. “The switch over the quarter to fewer people expecting declining rates and more expecting higher rates was marked. In the face of that shift, the greater degree of confidence on future house price increases is a call-out”.
What it means for the housing market
Optimism has increased across all regions, led by the South Island with a net 36% expecting house prices to rise over the coming year. Auckland recorded the largest quarterly improvement, with net house price optimism rising to 33%.
Nick says conditions continue to favour buyers, particularly first‑home buyers, with listings remaining high, giving purchasers plenty of choice and time to negotiate.
“From a buyer’s perspective, prices are stable, supply is at a 10‑year high and mortgage rates are still relatively low. However, rising expectations for both house prices and interest rates could prompt some buyers who have been sitting on the sidelines to act sooner rather than later, to avoid getting priced out.”
What’s next?
Expectations for both interest rates and house prices to rise over the next year may encourage some buyers to bring forward purchasing decisions. This, alongside an expected improvement in broader macroeconomic conditions, could underpin housing market activity. The recent lift in home lending to both investors and first‑home buyers supports this.
Despite the improvement in sentiment, ASB economists caution that household finances remain a key constraint. Unemployment is still elevated and economic recovery remains uneven across the regions which is likely to temper any near‑term surge in housing activity.
ASB economists are anticipating a 25bp OCR hike by year‑end and an eventual OCR peak of 3.25% but note that circumstances can change quickly – (read more here: https://www.asb.co.nz/content/dam/asb/documents/reports/economic-note/asb-rbnz-review-feb26.pdf?et_rid=NDE3ODI5NTcxMjM5S0&et_cid=10091851
The current steer from the RBNZ is that the OCR is expected to rise, just not immediately.
The latest ASB Housing Confidence Survey, along with other recent ASB reports covering a range of commentary, can be accessed at the ASB Economic Insights page: https://www.asb.co.nz/documents/economic-insights.html
