What is the average house price growth in New Zealand?

Over the past 30 years, New Zealand house prices have grown at an average annual rate of approximately 6–7%, based on long-term market data and historical trends.

Is 4% property price growth realistic for New Zealand?

While some forecasts suggest 4% annual growth, market fundamentals such as housing undersupply, population growth, and economic factors suggest a more likely long-term average of 6%.

Why might NZ house prices continue to grow at 6%?

Key drivers include structural undersupply, rising construction costs, strong net migration, and historically consistent capital growth patterns, all pointing toward sustained 6% annual growth.

How does 6% growth compare to 4% over time?

A 6% annual growth rate results in approximately 82% value increase over 10 years, compared to just 50% at 4%. This has major implications for long-term wealth creation through property investment.

What role does policy play in NZ property growth?

New Zealand’s property tax settings, including the lack of a general capital gains tax and the return of interest deductibility, support long-term investment and contribute to upward price trends.

Why NZ Property Price Growth Is More Likely to Average 6% p.a. Than 4%

Staircase Financial
Jul 14
2 min read

Updated: Jul 25

While some may suggest New Zealand’s future house price growth may average 4% annually, a deeper look at national fundamentals, economic dynamics, and long-term history points toward a more realistic 6% p.a. average over the next decade.

1. Structural Demand & Supply Imbalance

Persistent undersupply of housing.
New dwelling consents are falling, down 30% from their peak in 2023.
Developers face increasing construction and compliance costs, labour shortages and tighter lending.
Net migration is volatile i.e surged to 134,000 in 2023 then down to 26,400.
Land constraints and planning delays (e.g. zoning, infrastructure) continue to limit rapid expansion.

Bottom line: Demand typically exceeds supply, driving sustained upward pressure on prices.

2. Economic Tailwinds: Inflation, Credit & Policy

Inflation pushes up nominal asset values, especially property.
Rising construction and land costs are baked into future pricing.
Incomes are rising faster than inflation (avg. 4.1% p.a. since 2000), enabling buyers to borrow and spend more over time.
Interest rates are trending downward again as the RBNZ begins easing. Lower mortgage rates are rapidly improving serviceability and will drive renewed demand.
No capital gains tax (outside the brightline rule) makes property highly tax-efficient.
Recent and proposed policy changes (e.g. restoring interest deductibility) favour long-term investors, reinforcing property as a wealth-building vehicle.

3. History, Momentum & Market Cycles

Over the past 30+ years, NZ house prices have grown at an average 7% p.a. This is well above inflation, which averages around 2–3%.
Most 10-year holding periods have delivered at least 6%+ annual growth for residential property.
The COVID boom and 2022–23 correction are part of a typical cycle reset. With prices stabilising, history suggests a return to mid-cycle growth.
Market psychology, equity recycling, and expectation of capital growth all reinforce upward pricing over time.

Note: 4% p.a. growth would represent a historical anomaly unless major disruptive policies are introduced.

Historic Growth Rates

If growth is more in line with historic growth rates (circa 7%p.a.), then we would see values double in the next decade. Even at the very conservative pessimistic growth rate of 4% p.a. growth that would still equate to a 50% increase in property values over a decade.

7% compounded over 10 years = 100% growth
6% compounded over 10 years = 82% growth
5% compounded over 10 years = 65% growth
4% compounded over 10 years = 50% growth

The historic 10 year property price growth rate since 2000 has oscillated from between 110% (2007) and 58% (2017) (excluding the temporary Covid swing up to 160%).

New Zealand Property market: Annual vs 10-Year Capital Growth with Cycle Phases

Conclusion

National-level fundamentals, economic conditions, and long-term historical patterns all align more closely with 6% average annual growth rather than 4%.

While future gains may be more moderate than past booms, the structural drivers for mid-single digit capital growth remain intact.

Unless we see a radical oversupply or major tax reform, 6% is the more probable long-term average.

Curious what 6% growth could mean for your future?

Our team at Staircase can help you run the numbers and explore your options. Our team can help you make confident, data-driven decisions. Book a free strategy session with our team today.

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