In a Christchurch suburb where the city’s reconstruction has resulted in an exceptionally high percentage of newer housing stock by New Zealand standards, a couple in their early thirties is currently making the same calculations as the majority of Kiwi households in their situation: what they can borrow, how much they will have to repay, and whether the amount makes sense given their actual income. It’s easier to have a conversation about the current national stats than it would have been two years ago.
The average New Zealand home-buying household spent 56 cents of every dollar of income on mortgage repayments in 2022. This peak occurred at a time when the property market was inflated due to demand from the epidemic and rising interest rates. That percentage is currently around 40%. Still important. However, it is significantly different from the most recent peak and on the verge of the best affordability circumstances the nation has had in ten years.
However, a lot of smoothing work is being done by the national average, which tends to mask rather than reveal what is truly occurring around the nation. The affordability situation in Wairoa, Rangitikei, or Clutha, where households normally spend about 25% of income on mortgage payments, is very different from what first-home buyers in Auckland, where the equivalent figure is 47%, or in Queenstown, where it reaches 87%. New Zealand is not and has never been a single property market.
It takes a while to process that Queenstown number. To purchase an average home in the area, a typical local household would have to devote over nine-tenths of its gross income to mortgage repayments. For those who genuinely reside and work there, it is hardly a figure that characterizes a thriving residential real estate market. It depicts a very different market, one that is dominated by consumers whose main source of revenue comes from other sources.
It takes an average of 9.6 years to save a 20% deposit due to the national housing value-to-income ratio of 5.9 times gross household earnings, which is smoothed across regions with significantly varying starting positions. With income-to-payment ratios in the mid-30s percentages, Wellington and Christchurch are getting closer to their long-term norms. This is difficult but manageable for double-income households with steady jobs. Auckland is more difficult.
Due to the city’s inherent supply limitations and its position as the nation’s main employment and economic center, prices are kept high in ways that are not entirely explained by regional demand statistics. Some protection against borrowers overstretching is provided by the bank lending framework, which uses income multiples of five to six times gross wages and stress testing at 8–9% even when actual mortgage rates are lower. It also implies that many people who might afford a certain repayment at present rates are not eligible for the loan based on the evaluation criteria in place.
Since 2022, affordability has improved due to a number of factors, including declining home prices in many markets, a gradual easing of mortgage rates as the Reserve Bank of New Zealand completed its tightening cycle, and modest income growth that has moved the ratio in a more manageable direction. Buyers in Wellington and the South Island centers, where the adjustment from peak prices has been quicker and the value-to-income case for purchasing is now much cleaner than it was eighteen months ago, feel that the market is in a true recovery phase.
Due to the size of the price difference that formed during the 2020–2021 spike and hasn’t completely closed, Auckland is recovering more slowly. The RBNZ’s rate path, wage growth, and the availability of new housing—all of which are really unknown going into the second half of 2026—will determine whether the present improving trajectory continues.
Seeing the regional data side by side gives the impression that discussions about housing affordability in New Zealand should be plural rather than singular, since discussing the nation as a single market yields averages that are accurate overall but deceptive for the majority of those attempting to use them. Two couples from New Zealand are purchasing homes in Clutha and Queenstown. There are really few similarities between the conditions they are navigating. As a direction-of-travel indication, the national statistic of 40% of income is helpful. It needs a lot more context before it can be used as a reference to what any particular household should anticipate.
