Several years of lower property values, easing mortgage rates and rising household incomes has seen housing affordability across New Zealand return toits long-term average, unwinding much of the deterioration seen during the pandemic.
Several years of lower property values, easing mortgage rates and rising household incomes has seen housing affordability across New Zealand return toits long-term average, unwinding much of the deterioration seen during the pandemic.
The latest Cotality Housing Affordability Report shows conditions improved across every major measure of affordability in the June quarter with thevalue to income ratio returning to its long-term average and mortgagerepayments falling below their historical norm as a share of household income.
The time required to save a deposit and rental affordability also improved to their most favourable level in almost 10 years.
Cotality NZ Chief Property Economist Kelvin Davidson said while housing was not necessarily "cheap", affordability was no longer the significant barrier it was a few years ago.
"Mortgage rates remain well below their recent peaks, property values are still below their highs, and household incomes have continued to rise," Mr Davidson said.
"The combination of those factors has restored housing affordability to much more normal levels across New Zealand. Buying a home will always be challenging, particularly for first home buyers saving a deposit, but affordability is no longer the handbrake that it was four or five years ago."
The national value to income ratio fell to 6.7 in Q2 2026, matching its long-term average (which is for the period 2004-26) and down from the peak of9.8 recorded in late 2021.
The typical time required to save a 20% deposit also eased to 8.9 years,slightly below the long-term average of 9.0 years and well below the cyclical peak of 13.1 years.
Mr Davidson said mortgage repayments required to service a new loan, themost meaningful measure for households, fell to 40% of gross household income,below the long-term average of 42% and substantially lower than the 54% peak recorded in late 2021.
Rental affordability also improved, with median rents absorbing 25.5% ofhousehold income nationally, broadly in line with the long-term average and themost favourable conditions for tenants in about a decade.
“That being said, it’s important to recognise that some tenants will be paying typical rents but not earning an average income. This will make rentingmore difficult for them than these headline numbers suggest,” Mr Davidsonnoted.
Affordability gains uneven across the country
Among the main centres, Auckland, Tauranga and Wellington recorded the strongest turnaround after several years of subdued property values. Auckland'svalue to income ratio has fallen to 7.2, below its long-term average of 7.5,while Wellington now has the lowest value to income ratio of the main centres at 5.5, well below its historical average of 6.2. Mortgage repayments have alsodropped below long-term averages in all three cities, while the years requiredto save a deposit have returned to below-average levels.
Conversely, Christchurch and Dunedin experienced a more modest improvement after property values proved more resilient during the downturn. Christchurch's value to income ratio remains above its historical average at 6.7 compared with 6.0, while Dunedin was 6.1 compared to its long-term average of 5.7. Deposit affordability also remains more stretched than normal in both cities.
"Markets such as Auckland, Tauranga and Wellington haven't necessarily become inexpensive, but after several years of softer property values, they're more affordable than they've been for many years," Mr Davidson said.
"By contrast, Christchurch and Dunedin have held onto more of their earlier price growth. That's good news for existing home owners, but it also means affordability hasn't improved to the same extent as we've seen elsewhere."
Outside the main centres, Whangārei, Kapiti Coast and Nelson have value to income ratios and deposit measures below their own long-term averages, while Gisborne, Hastings, Napier and Palmerston North are close to their long-term benchmarks. Queenstown and Invercargill remain among the country's least affordable markets for owner-occupiers, owing to the recent resilience of property values, while rental affordability continues to be a challenge across many provincial centres.
Affordability outlook
With economic uncertainty still elevated and buyers generally continuingto enjoy plenty of choice, improved affordability does not necessarily point toa renewed period of rapid house price growth.
However, it does suggest the scope for any further significant falls has become more limited and buyers should not expect a return to unusually cheap housing.
"Trying to keep housing affordability around its long-term position is not just about easing mortgage rates and weaker house prices, it requires anadequate supply response for new dwellings,” he said.
"The news there looks encouraging, with the government currentlypushing a wide range of measures aimed at increasing housing supply but thattakes time and patience."
