04-08-2025
NZ's house price crash - could it happen here?
House prices and rents have plummeted across the ditch, but experts are warning there will not be a similar correction in the Australian market any time soon.
In New Zealand, home values have fallen back to 2019 levels, after prices reached an all-time high during the pandemic.
Rents have also declined this year for the first time since 2009 - meaning housing in New Zealand is more affordable whether buying or renting.
Mortgage rates and construction have both declined in New Zealand as well, conditions that would usually drive prices up.
But net overseas migration into New Zealand also fell - to its lowest point in the past two-and-a-half years - which was helping to stop demand from outpacing supply, according to Macrobusiness chief economist Leith van Onselen.
Meanwhile in Australia, the latest PropTrack data showed national home prices reached a record high of $827,000 in July, rising 0.3 per cent last month and 4.9 per cent over the year.
Mr van Onselen described the New Zealand slump as a 'beatiful house price crash' and said although the two markets shared similarities, with current policy settings the Australian market would only continue trending upward.
'We're still running a very strong migration program and the government intends to keep that going,' he told
'And more imporantly, the federal government has announced a whole bunch of policies to stimulate house prices.'
Those policies included the Labor government's plan to allow all first-home buyers to purchase with a 5 per cent deposit.
The program, available from January 2026, will mean the government guarantees up to 15 per cent of the loan value, eliminating the need for lenders mortgage insurance, which can cost more than $20,000.
It is an extension of an existing scheme and will cover all Australian first home buyers, with no income caps or limits of the number of places available.
Banks will also be allowed to overlook student loans in their debt calculations, after financial regulators updated their regulations at the request of the government.
Although this push by the federal government was aimed at improving affordability, it would actually have the opposite effect, Mr van Onselen said.
'All these policies are about boosting demand and pushing up house prices.'
During the boom in New Zealand, the Ardern government banned non-resident foreigners from buying homes, a move akin to Australia's ban on foreign buyers.
It also scrapped a tax advantage for investors similar to negative gearing in Australia - the ability of landlords to deduct mortgage interest against their rental income.
And it extended the threshold for the 'bright-line test,' which is a bit like a capital gains tax when properties other than the family home are sold.
Mr van Onselen argued those changes had helped to rein in house prices, although the current Luxon government has since reversed the tax changes.
'Australian immigration is a lot stronger than New Zealand but the big one's really just the policy settings,' he said.
'For the next 12 months I think Australian house prices are going to go up pretty strongly - all the forces are for higher house prices.'
But Mr van Onselen did hold out the possibility of a decline in future - if the government reversed some of its policies which, ironically, were aimed at making homes more affordable.
'The government might be forced to do something... Eventually, they're going to have to make some hard decisions to raise revenue, and one way would be to curb some of those concessions.
'That could eventually curb demand a bit, and if it goes far enough we could end up doing a New Zealand.'
Australia's 'opposite' conditions
Metropole Property Strategists founder Michael Yardney agreed that the correction in New Zealand was due to a number of factors that Australia doesn't share.
Mr Yardney, who was the keynote speaker at the New Zealand Property Investors Federation last year, said after a pandemic-driven boom, the Kiwi market had slumped due to excess supply.
'A string of policies led to so-called 'up zoning' in Auckland, leading to the construction of significant new affordable housing. This oversupply of cheap accommodation caused decreased property values and lower rents,' Mr Yardney told
Tax policies had also discouraged property investors from buying, and rising unemployment and weak economic conditions had also contributed to declining rents and cooling demand.
Australia, on the other hand, had an 'almost opposite dynamic,' including high population growth, generous first-home buyer support and a generally strong economy, he said.
'Given these fundamental differences, it is unlikely Australia will follow New Zealand into a correction phase in the next couple of years.
'Unless something disrupts our supply-constrained market, such as a sharp economic shock, a steep rise in unemployment, or a sudden reversal of migration - none of which are obvious on the horizon - the balance of forces suggests ongoing moderate property price growth for the next few years.'
