Mortgage affordability in New Zealand - Data and Analysis (2006-2034)

IBISWorld forecasts the proportion of household monthly earnings remaining after a mortgage repayment to rise by 1.30 percentage points in 2026-27 to 72.3%. This growth marks a continuation of the rebound in mortgage affordability witnessed in 2025-26. The aggregate value of private residential sector dwelling values is forecast to expand by 0.7% in 2026-27, based on data from the RBNZ and the NZ Treasury. However, IBISWorld expects the total number of households in New Zealand to expand at a faster rate, supported by an expansion in the total population. This increase in housing supply, in excess of forecasted residential sector dwelling values indicates the potential for housing price declines throughout 2026-27. At the same time, mortgage affordability is likely to be supported by stability in the Official Cash Rate (OCR). In the June 2026 quarter, the OCR remained stable at 2.25%, its lowest level since July 2022. This low-interest-rate environment will allow mortgage affordability to climb in 2026-27, as a smaller percentage of household income is allocated to interest repayments.The forecasted improvements in mortgage affordability in 2026-27 would mark the third consecutive year of affordability growth, after affordability levels dipped to the lowest levels witnessed in over 20 years in 2023-24. In response to an overheating property market and rising inflation following the reopening of the economy after pandemic restrictions, the RBNZ started tightening monetary policy and lifting the OCR from October 2021. The RBNZ then engaged in one of its fastest hiking cycles in history, lifting the OCR a cumulative 525 basis points between October 2021 and May 2023. As a result, mortgage affordability plummeted in 2022-23 and 2023-24. Throughout this period, a housing shortage in New Zealand also contributed to the significant rise in property prices and led to larger mortgages being taken out by households.After more than 12 months stable at 5.50%, the RBNZ began cutting the OCR in August 2024, until it reached 2.25% in November 2025. This has eased pressure on households with mortgages and boosted the amount of money left over after a mortgage repayment, as evidenced by the rebound in mortgage affordability over 2024-25, 2025-26 and 2026-27. Over this period, the average house price has also remained contained, while average monthly earnings per household have climbed, further supporting housing affordability. While lower borrowing costs have supported mortgage repayments, increased costs in other domains have kept households under budgetary pressure, offsetting further increases in mortgage affordability. Overall, IBISWorld forecasts the proportion of monthly household earnings remaining after a mortgage repayment to rise at an average annual rate of 1.58 percentage points over the five years through 2026-27.