Housing Affordability Surges in Auckland and Wellington

A significant improvement in housing affordability has been reported across New Zealand, with Auckland and Wellington showing some of the most notable gains. According to Cotality’s latest housing affordability report, the national median house price reached $803,151 in the three months to December 2025. This figure represents a ratio of 7.2 times the median annual household income of $111,400, marking the lowest ratio since a brief improvement in 2019 and prior to that, 2016.

The report highlights a substantial recovery from the peak of the Covid-era housing boom. During late 2021, the affordability ratio peaked at an alarming 8.8, but recent trends indicate a reversal in this trend. Cotality’s chief property economist, Kelvin Davidson, emphasized that while housing remains expensive, it is now comparatively easier for first-time buyers and those looking to upgrade their homes.

Affordability levels have improved significantly due to a combination of factors. Davidson points to lower house prices, rising incomes, and decreasing mortgage rates as key elements that have eased the burden on buyers. He noted, “The house-price-to-income ratio has come down, and it’s now easier to save for a deposit and to service a mortgage.” Although challenges persist, the conditions for purchasing a home have markedly improved.

The report reveals that households are now spending an average of 42% of their income on servicing an 80% Loan-to-Value Ratio mortgage, down from a peak of 56% in 2022. Additionally, the time required to save for a 20% deposit has decreased to an average of 9.6 years, an improvement from 13.4 years in 2021, although it remains slightly above the long-term average of nine years.

Auckland and Wellington Lead the Charge

In Auckland, the median house price stands at $1.04 million, with a house price-to-income ratio of 7.5. This marks the lowest level in over 11 years and is just 0.2 points below its long-term average of 7.7. The time required to save for a deposit has also decreased to an average of 10 years, which is a multi-year low, and is better than the long-term average of 10.2 years. Mortgage servicing costs for Auckland residents now account for 44% of their income, a marked decline from the high of 63% in late 2021 and below the long-term average of 48%.

Wellington has also experienced positive changes. Here, the median house price is $878,869, and the house price-to-income ratio has improved to 6.4, aligning with its long-term average. It now takes an average of 8.5 years to save for a deposit, down from 11.0 years, while mortgage servicing costs represent 37% of household income, below the long-term average of 40%.

Despite these improvements, Tauranga remains the least affordable main centre, with a median price of $928,718 and a ratio of 8.5. This is a significant drop from its peak ratio of 11.9 in late 2021. Other regions like Hamilton, Christchurch, and Dunedin have also seen modest improvements, with house-price-to-income ratios of 6.9, 7.1, and 6.7, respectively.

Davidson noted that the recent under-performance of house prices in Auckland and Wellington has been crucial in restoring affordability in these markets. He explained that regions like Hamilton, Christchurch, and Dunedin have shown less improvement due to more resilient prices in those areas, which have experienced modest growth recently.

Challenges for Renters Persist

While the report paints a hopeful picture for prospective homebuyers, it reveals less encouraging news for renters. Nationally, rental affordability remains a concern, with rents consuming 27.9% of gross household income, down slightly from a peak of 28.5% but still above the long-term average of 25.8%. A recent decline in rents in Auckland and Wellington has brought those markets closer to their historical norms, but many areas continue to experience high rent-to-income ratios.

Many tenants face financial strain, as rental growth is often driven more by tenant affordability than landlord costs. Davidson indicated that with many tenants already stretched financially, there is little room for rent increases in the near term.

Overall, Davidson expresses cautious optimism about the current state of housing affordability. He acknowledges that while there are limits to how much prices can rise in the short term, sustainable improvement in affordability hinges on the construction of more homes. This need for increased supply is critical to meet demand. The government is reportedly focusing on measures to enhance land availability and necessary infrastructure, which could facilitate this growth.