ASB says New Zealand house prices may not approach late-2021 peaks on a nominal basis until late 2029, and much later once inflation is stripped out.
Senior economist Mark Smith put national values about 15% below peak in nominal terms and about 30% lower in real terms in the bank's September 2026 housing commentary. ASB expects no change in nationwide median house values in 2026 and a 3.5% lift in 2027, with growth thereafter tracking nominal incomes.
Smith argued the multi-decade boom that delivered a roughly six-fold rise in the 30 years to 2020 rested on falling interest rates, strong working-age population growth and tight supply. Those props have weakened. The long decline in mortgage rates from the early 1990s to 2020 has run its course. Demographics are less supportive. Housing supply, especially multi-unit product, has lifted.
Covid-era stimulus supercharged the most rate-sensitive sector. ASB says households are still living with that hangover.
Then in the Covid-era period, we had policy stimulus really thrown out there to try and support the economy. The most interest rate-sensitive part of the economy is typically housing and that took off. We're still living with that hangover now.
An income-led recovery would be more measured and more sustainable than another credit-fuelled surge, Smith said.
As a result, it is unlikely to be until late 2029 that nationwide house prices approach late 2021 peaks on a nominal basis, and much later than on an inflation-adjusted basis.
How the independent gauges line up
Independent gauges line up on the distance from peak. Cotality's Home Value Index put the national median at $797,944 in August 2026 after a 0.4% monthly fall — the fifth consecutive decline — and about 18% below the early-2022 peak near $977,000. Auckland sat about 24.5% below peak and Wellington about 27.2%, while Christchurch was only about 1.3% short. ASB's regional split matches that pattern: Auckland and Wellington further behind; Canterbury largely recovered.
QV's August index had the average home at $894,977 after a 1.9% three-month drop. REINZ August medians were $761,000 with sales soft. realestate.co.nz counted 32,908 homes for sale in August, 45% more than three years earlier, with the national average asking price $849,362.
Peer banks are subdued too
Peer banks are also subdued.
- ANZ expects house prices to fall around 2% over 2026 then rise about 3–4% a year in 2027–28, with a long-run trend nearer 4% a year rather than the roughly 6% average since 1992.
- BNZ's Mike Jones has held a flat 2026 call and about 3% for 2027.
- Westpac revised 2026 to a mild +0.6% and 2027 to +2%.
Infometrics' Gareth Kiernan earlier projected average growth of 3.1% a year to mid-2030, a nominal reclaim of the 2021 peak around mid-2029, and real prices still about a fifth below peak by the mid-2030s.
OCR path and mortgage cost
The Reserve Bank lifted the OCR 25 basis points to 2.75% in its September 2026 decision. RBNZ projections have house prices falling 0.5% in 2026, then rising 2.4% in 2027 and 5.2% in 2028, with real prices rising only modestly from mid-2027 in line with incomes. Flat house prices and job insecurity are weighing on consumption, especially in Auckland and Wellington, the central bank said.
ASB's own OCR peak view sits at 3.25% in 2027. On a typical $700,000 mortgage, each extra 25 basis points of fixed rate costs roughly $67 a fortnight before tax; 50 basis points costs about $135. That is material when wage growth remains moderate and equity rebuild is slow for peak buyers still 25% or more underwater in Auckland and Wellington.
Supply as the under-appreciated brake
Supply is the under-appreciated brake. Stats NZ recorded 40,581 new homes consented in the year ended June 2026, up 19%. Multi-unit dwellings rose 21% to 21,954, including 17,675 townhouses, flats and units. Stand-alone houses rose 17% to 18,627. Denser product in places people want to live expands choice and caps the ability of prices to run ahead of incomes.
The banking desk read
For the big four Australian-owned banks plus Kiwibank, an income-led rather than boom-led housing path means slower residential credit growth, fewer capital-gains top-ups, and a less violent impairment cycle than the Covid boom-bust. RBNZ debt-to-income and loan-to-value settings remain binding. Without rapid price gains, the wealth channel into retail stays muted and consumption tracks real incomes and job security more tightly — the same factors the RBNZ cites as weighing on Auckland and Wellington demand.
Smith acknowledged post-Covid forecasting has been humbling and that old behaviours die hard. He sees few of the 2020–21 conditions — massive policy support, truncated supply, ultra-low rates — repeating. If housing surprises to the upside, ASB says the OCR could need to move above its 3.25% peak view in 2027.
The banking desk read is straightforward. Mortgage books will grow more slowly. Peak-vintage borrowers in Auckland and Wellington face multi-year waits for nominal breakeven and longer still for real breakeven. First-home buyers gain time and choice from elevated listings and multi-unit supply, but lose some of the earlier rate-cut windfall as the OCR climbs. Credit growth and bank capital cycles look steadier, not spectacular, through late decade.
