A key signal from government reform: should economic growth stop banking on housing? Housing Minister says the era of relying on property speculation must end!
Over the past few decades, New Zealand’s economy and house prices have almost developed an unspoken understanding: when house prices rise, households feel wealthier, spending picks up and credit becomes easier, as though everything in the economy runs more smoothly. But National appears to be rewriting that model.
Over the past few decades, New Zealand’s economy and house prices have almost developed an unspoken understanding: when house prices rise, households feel wealthier, spending picks up and credit becomes easier, as though everything in the economy runs more smoothly. But National appears to be rewriting that model.
The latest REINZ June housing report shows that the national median house price was unchanged year on year at NZ$770,000. Auckland prices continued to fall, while several regions recorded substantial gains. Beneath this seemingly calm surface lie tensions between policy and the market, and between confidence and a reluctance to act.
More significant is Housing Minister Chris Bishop’s statement to the media: “We must abandon the idea that economic growth depends on rising house prices.” When a statement from the heart of government decision-making is explicitly described as “part of economic reform”, it represents more than a change in thinking. It signals a profound adjustment affecting the housing market, household wealth and even the structure of national growth.
This is no ordinary market fluctuation, but a deliberate loosening of the old growth model. If housing is no longer the engine stimulating the economy, what will support our future?
1 Prices flat and sales slowing as buyers and sellers wait for a signal
The figures show that nationwide sales volumes in June rose 20% year on year, but fell around 5% after seasonal adjustment. Listings were also down 2.5% year on year. Meanwhile, the average time taken to sell a home extended to 50 days, suggesting that although activity has picked up somewhat, the market remains far from buoyant.
REINZ chief executive Lizzy Ryley notes: “Buyers are still entering the market, but they are more cautious. Most sellers have also adjusted their expectations and accepted market realities.” In practice, however, some sellers are delaying listing because offers fall below their expectations, leaving the market caught in a stalemate of high stock levels and low sales.
2 The housing market is stable, but the Government has no plans to push prices up
Housing Minister Chris Bishop recently made it clear that New Zealand must end its reliance on rising house prices for economic growth. “The economy should be driven by productivity, not house prices,” he said. The Government’s current strategy is to use planning reform and increased housing supply to bring about a gentle decline in house prices in real terms, reshaping the structure of economic growth.
Housing Minister Chris Bishop
In his view, house prices failing to rise is a necessary adjustment rather than a crisis. With persistently high prices having shut first-home buyers out of the market, flat or moderately declining prices should be seen as a positive signal rather than bad news.
3 Monetary policy takes time to work as the market waits
Since the beginning of 2024, the Reserve Bank of New Zealand has cut the official cash rate (OCR) six times in succession, by a total of 225 basis points. Yet house prices have still not rebounded significantly. Economists generally believe this is closely linked to the lag before monetary policy feeds through to asset prices.
Kiwibank chief economist Jarrod Kerr
Kiwibank chief economist Jarrod Kerr says: “Further interest rate cuts are key to stimulating housing demand. Our optimistic outlook for economic growth in 2026 rests largely on a recovery in the housing market.”
BNZ head of research Stephen Toplis cautions that household wealth has barely grown since mid-2021, with property values its central component. “Without growth in asset prices, households’ willingness to spend is naturally constrained.”
4 Hopes for economic growth can no longer rest on property
This adjustment is more than the ebb and flow of a market cycle: it is a structural rebalancing. Policymakers no longer regard rising house prices as a prerequisite for economic prosperity. Instead, they are trying to establish a more sustainable path to growth that relies less on asset bubbles.
In the process, the property market may experience a longer period of sideways fluctuations, but that is not necessarily a bad thing. As Bishop says: “Market stability should be celebrated, not lamented.”
A question to consider: leave the old path behind?
New Zealand is taking a different path from the past. As the housing market cools, strong exports and recovering business confidence suggest the economy is seeking new sources of support. For investors and home buyers, does this mean abandoning the old mindset of waiting for house prices to rise and relying on property for profit, in favour of a more rational and diversified approach to the market?
Do you agree with Housing Minister Chris Bishop that New Zealand’s economy must end its dependence on rising house prices? Share your thoughts in the comments.