Housing affordability across New Zealand has improved noticeably, with the latest figures from Cotality showing conditions are now the most favourable they’ve been in several years.
The national value-to-income ratio fell to 7.2 in the December 2025 quarter, the lowest since a brief period in 2019 and before that, 2016. While it’s still slightly above the long-term average of 6.8, this is a big improvement compared with the stretched affordability seen during the post-Covid housing boom.
Kelvin Davidson, Chief Property Economist at Cotality, said several factors are easing pressure for buyers:
“Lower property values, rising incomes, and falling mortgage rates have all helped buyers. Housing isn’t cheap, but for first home buyers or those looking to upgrade, conditions are currently the best they’ve been in several years, and closer to historic norms.”
Mortgage repayments now take up about 42% of the gross median household income, roughly in line with the long-term average. That’s a big drop from the peak of 56% seen in early 2022 and late 2023.
Mr Davidson noted that lower interest rates have made a significant difference:
“Mortgage affordability isn’t easy, but in the current lower-interest-rate environment, it’s less of a barrier to buying than it was a few years ago.”
Saving a 20% deposit has also become more achievable. It now takes an estimated 9.6 years to save a typical deposit, down from the post-Covid peak of 13.4 years. While this is still a little above the long-term average of nine years, it reflects both lower property prices and rising household incomes.
What This Means for Buyers
Better affordability could remove one of the main barriers that has slowed housing activity in recent years. Other factors, like the employment outlook and lending rules, will still affect the market, but improving affordability could create opportunities for first home buyers or those looking to upgrade in 2026.
If you’re thinking about buying your first home or moving to a new property, now is a good time to review your options. Give me a call to explore your borrowing capacity and see how current conditions could work in your favour!