Treasury reduces forecasts for New Zealand house price growth

Treasury has reduced its forecasts for New Zealand house price growth in its Pre-Election Economic and Fiscal Update (PREFU). The updated projections suggest growth of 0.6% in 2027 and 2.4% in 2028. These figures are lower than the May Budget Economic and Fiscal Update (BEFU) which predicted 4% growth in 2027 and 4.6% in 2028.

The downward revisions are attributed to higher interest rates, increased housing supply, and lower net migration than previously forecast. Treasury also noted that a spike in fuel prices caused by Middle East conflict reduced real household incomes and spending. While prices have been broadly flat nationally, the South Island has seen year-on-year increases in areas exposed to export performance, whereas prices have continued to fall in main North Island urban centres.

The revised forecasts may impact the Labour Party's proposed capital gains tax (CGT), which is intended to fund health policies. Labour's costings for the tax, which is promised to begin in July 2027, are based on an assumed annual house price growth of 3%. Leader Chris Hipkins stated, “We deliberately costed it conservatively, recognising that property prices stabilising and lower growth in property prices is a good thing”.

Finance Minister Nicola Willis noted that the updated forecasts show a return to more moderate positive annual growth. She described previous prices as being "out of control" and "distortionary" to the economy.

Where reports differ

• Reports differ on the 2026 house price growth forecast, with one reporting -0.5% and another reporting -0.4%

Compiled from reports by The Post and NZ Herald.