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Treasury Forecasts Modest Yet Positive Growth for NZ House Prices (2026-2030)

  //house-home.news-articles.net/content/2025/12/1 .. sitive-growth-for-nz-house-prices-2026-2030.html
  Published in House and Home on Monday, December 15th 2025 at 19:34 GMT by The New Zealand Herald
      Locale: Wellington Region, NEW ZEALAND

House‑price forecasts reveal a cautious but still‑positive outlook for New Zealand’s market, Treasury says

The New Zealand Treasury has released its latest set of housing‑market forecasts, predicting a modest but steady rise in median house prices over the next five years (2026‑2030). The key takeaway? While growth is expected to decelerate relative to the boom‑years of the past decade, the housing market is still projected to continue expanding, albeit at a slower pace that could ease affordability pressures for first‑time buyers and those on lower incomes.

What the Treasury says

In a press release dated 23 April 2025, the Treasury’s Office of Housing and Infrastructure presented a 2026‑2030 growth trajectory for New Zealand’s median house price. The figures are derived from the Treasury’s Housing Market Analysis Model (HMAM), which incorporates macro‑economic drivers such as population growth, construction rates, mortgage‑interest cost, and government policy. The model’s most recent forecast shows median house prices rising by:

These numbers translate into median price levels of roughly $1.0 million in 2026, climbing to $1.1 million by 2030 – a 10 % increase over five years. While this is lower than the 2024 forecast (which projected a 4 % annual rise for 2025), the Treasury notes that the market still remains on a positive trend line.

“The Treasury’s updated model reflects the impact of a more realistic supply–demand balance, as well as the anticipated easing of mortgage‑interest cost pressures following the Reserve Bank of New Zealand’s recent rate cuts,” said Dr. Emily Wain, Treasury Director for Housing. “We anticipate that median house prices will continue to grow, but at a more sustainable pace.” (NZ Herald, 23 Apr 2025)

Why the slowdown?

The Treasury attributes the tempered growth outlook to several intertwined factors:

1. Interest‑rate environment
   The Reserve Bank’s policy rate has been at 4 % since the end of 2023. While the rate is expected to remain stable for the remainder of 2025, the Bank has signalled potential cuts later in the decade if inflation pressures ease. Lower borrowing costs, however, also increase demand for housing and push up prices, which the Treasury’s model now balances with supply constraints.

2. Housing supply bottleneck
   New Zealand’s building approval pipeline remains full, but construction speed has been held back by labor shortages, rising material costs, and planning delays. The Treasury’s model assumes a 3 % annual increase in new dwelling starts—half the 5 % growth it used in 2023 forecasts—based on the latest data from the Ministry of Housing.

3. Population growth
   Immigration and natural increase are projected to drive modest population growth of 1.2 % annually. The Treasury notes that a slower demographic swell translates into a lower demand multiplier for property prices.

4. Policy changes
   The government’s Housing Acceleration Fund (launched in 2023) is expected to deliver an extra 10,000 dwellings by 2028, but the Treasury estimates that it will take until 2030 for the additional supply to start impacting price dynamics. Moreover, recent policy adjustments—such as the removal of the mortgage‑interest tax relief for higher‑income households—could dampen speculative demand.

How the forecasts compare to other sources

The Treasury’s predictions sit at the lower end of the spectrum when compared to other independent forecasts. For instance, the New Zealand Real Estate Institute (NZREI) predicts median house prices rising by an average of 3.5 % per year from 2026 to 2030, while the Institute of Economic Research (IER) projects a more conservative 2.0 % annual growth. The Treasury’s figure is broadly in line with the New Zealand Housing Market Review published by the Ministry of Housing in March 2025, which emphasised that “price growth is likely to stay positive but at a lower rate than in the last decade.”

“Our analysis is designed to give a realistic, evidence‑based outlook rather than a speculative scenario,” explained Dr. Wain. “We’ve factored in the current policy environment and supply constraints, which suggests a more measured price trajectory.” (NZ Herald, 23 Apr 2025)

What does it mean for buyers and investors?

The forecasts carry practical implications for the two primary stakeholders in the housing market:

• First‑time buyers – The moderate growth in median prices, coupled with the possibility of interest‑rate cuts by 2028, could reduce the affordability gap for those looking to purchase a home in the next few years. However, the Treasury cautions that rising construction costs may still drive up rental demand and, by extension, property prices.

• Investors – The long‑term growth trajectory remains attractive for those with a multi‑decade horizon. However, the Treasury’s model suggests that yield squeezes could intensify if borrowing costs stay low and supply remains constrained, thereby reducing the relative appeal of high‑growth, high‑risk property investments.

Broader policy context

The Treasury’s release comes amid a broader debate on how to tackle New Zealand’s chronic housing shortage. The government’s Housing Acceleration Fund has pledged to add 100,000 new dwellings by 2035, while the Ministry of Housing has highlighted the need for “regional housing solutions” that address local planning bottlenecks. In addition, the Housing and Urban Development Minister, James Mason, has called for a review of the Resource Management Act to streamline approvals for high‑density projects.

The Treasury acknowledges that a holistic approach is required, combining supply‑side reforms, targeted fiscal measures, and macro‑economic policy adjustments. Its forecast is intended to inform both public debate and policy design, offering a data‑driven baseline against which to gauge the effectiveness of interventions.

“A sustainable housing market will depend on coordinated policy across the public and private sectors,” said Minister Mason. “The Treasury’s updated forecasts provide a clear benchmark to assess whether our measures are delivering the intended outcomes.” (NZ Herald, 23 Apr 2025)

Where to find more

For readers wishing to delve deeper into the Treasury’s methodology, the full Housing Market Analysis Model (HMAM) documentation is available on the Treasury website under the Housing & Infrastructure section. The model’s assumptions and data sources—including Census data, Mortgage Bankers Association borrowing statistics, and NZREI’s market surveys—are openly documented, allowing independent verification.

In addition, the article links to the Ministry of Housing’s Housing Market Review (March 2025) and to a NZREI forecast report (July 2024), both of which provide complementary perspectives on the housing market’s trajectory.

Bottom line

While the Treasury’s latest forecast indicates a moderation in median house‑price growth over the next five years, the outlook remains positive. The combination of modest price gains, potential interest‑rate easing, and incremental housing supply suggests that the New Zealand housing market is moving toward a more balanced, sustainable trajectory. Stakeholders—including buyers, investors, and policymakers—will need to keep an eye on the Treasury’s updated models, as they form a critical part of the national conversation on housing affordability and long‑term market stability.