Home affordability gains momentum as every region sees improvement

The Home Affordability Report, produced by Massey University’s Real Estate Analysis Unit (REAU), found national affordability improved by 12.6 per cent during the first quarter of 2026, following a two per cent improvement in the previous quarter. Over the past year, affordability has improved by 23.1 per cent nationally, with all 16 regions recording gains.

Report author Dr Arshad Javed, who leads the REAU within the Massey Business School, says the results reflect several factors working together to improve affordability.

"Mortgage interest rates remain the single most important factor influencing housing affordability. As borrowing costs have continued to decline, households are spending a smaller proportion of their income on mortgage repayments. Combined with continued income growth and softer house prices in many regions, affordability has improved much more strongly than it did late last year."

The March quarter saw a notable turnaround across the country. While affordability improved nationally in the December quarter, four regions recorded declines. Three months later, every region has experienced improved affordability.

Marlborough recorded the country's strongest quarterly improvement, with affordability increasing by 21.7 per cent after median house prices fell by 11.5 per cent during the first quarter of 2026. The result follows the December quarter, when Marlborough recorded the largest deterioration in affordability nationally after a sharp rise in house prices.

Auckland also experienced a significant turnaround, with affordability improving by 13.9 per cent after remaining largely unchanged during the previous quarter. Northland continued its strong performance, recording a 13.3 per cent quarterly improvement and the country's largest annual improvement in affordability at 32 per cent.

Dr Javed says the changing pattern of house prices has reinforced the impact of lower mortgage rates.

"During the December quarter, lower interest rates were offset by rising house prices in most regions. In the March quarter, we saw house prices decline across half of New Zealand's regions, allowing lower borrowing costs, rising incomes and softer prices to work together. That's why the improvement in affordability has been much more pronounced."

Nationally, the median house price fell by 1.6 per cent during the March quarter, while the average two-year fixed mortgage interest rate declined by a further 0.54 per cent to 4.66 per cent in January 2026. Average weekly earnings also continued to increase across every region.

Dr Javed says the results are encouraging, but affordability remains dependent on future movements in interest rates, incomes and house prices.

"Housing affordability has improved considerably over the past year and the latest results show that trend is continuing. While housing remains expensive by historical standards, lower borrowing costs and continued income growth are making home ownership more achievable for many households. Maintaining that momentum will depend on interest rates remaining relatively low, incomes continuing to grow and house prices remaining broadly stable."

The quarterly Massey Home Affordability Index measures housing affordability by combining regional median house prices, mortgage interest rates and average weekly earnings to assess the ability of an average household to purchase a home.

Read the full Home Affordability Report here.