Housing affordability is at the best level in almost a decade, but the effect is not being felt evenly.
Cotality has released data that shows the national median house value had fallen to 7.2 times the annual median household income at the end of last year.
It was still above the long-term average of 6.8 but was the lowest, apart from a brief drop to 7.2 in 2019, since it was 7 in 2016.
Cotality chief property economist Kelvin Davidson said prices had been flat or falling for the past few years, and were still down 18% from the peak.
"We've had incomes go up over that period and, in the last couple of years since sort of mid-24, interest rates have come down too.
"Across all of those measures there's been a pretty big improvement and one that sticks out would be the mortgage payments as a share of incomes is now back down to its average."
"So, not saying housing is cheap or anything, it's certainly not, it's still a challenge to get into the market, but when you look at that measure it's pretty much back to normal.
"Maybe a way of thinking about it is the handbrake that's been there in the past from housing affordability is off and we're not on the accelerator, but at least that handbrake isn't there now. It doesn't necessarily mean we're going to go straight into a new boom for house prices or anything, but maybe that restraint that has been there is not so much a factor anymore."
Tauranga was the least affordable main centre, with a house price-to-income ratio of 8.5.
Auckland was the second most unaffordable, at 7.5, but was cheaper than normal by that standard.
Wellington was most affordable, at 6.4.
Across all regions, Thames Coromandel, at 14.5, and Queenstown Lakes, at 16.1, were the least affordable.
Kaikoura was also in double digits at 10.6.
Areas such as Clutha and Grey were most affordable, at 4.6.
Falling interest rates had helped bring down the share of income required to cover home loan repayments to 42%, back to its long-term average.
"When you look at Auckland and Wellington and Tauranga to some extent, on the mortgage payments as a share of incomes measure, those are actually below average now.
"Not saying it's screamingly cheap but those markets have adjusted a long way to the point where that figure is below its normal level."
He said paying off a new mortgage might not be easy, but it was not the significant handbrake that it would have been on growth in 2021 or 2022.
"I suspect more people would be out there at the moment thinking 'yeah it's not cheap, but I can make it work'. Across all measures now I think you'd probably call it relatively normal."
Areas like Invercargill had not had their affordability improve at all, he said.
"Places like Queenstown are still very unaffordable in general. Queenstown's a sort of market on its own really.
"We look at house prices in relation to income and what that might mean for mortgage payments but I think Queenstown's a market where income is less relevant. It's more about wealth and how much equity you're bringing in from other parts of the country, how much equity you might have already built up.
"Buying a house there on the local income is going to be a lot more challenging than anywhere else."
Davidson said ongoing housing supply would be needed to keep affordability in check.
It was taking 9.6 years to save a deposit, based on median property values and household incomes. That is above the long-term average of nine years but lower than the peak of 13.4.
Wellington's 8.5 years was the shortest since 2016. Auckland's 10 years was below its long-term average of 10.2 years.
Rents took up 27.9% of gross household income nationwide, above the long-term average of 25.8% but an improvement over 2025.
"Although the situation has got better for renters in the past year or so, it remains testing," Davidson said.
"In turn, this may actually be preventing some households from actually taking that next step into home ownership in the first place. It is also important to acknowledge that some tenants will be finding it harder than these figures suggest, given that many renting households may actually have incomes below the median. In other words, they might pay typical rents, but have incomes towards the lower half of the spectrum."
Davidson said he was not expecting a house price boom. "It's probably going to be a period where perhaps house prices are rising only modestly and are tied more closely to household incomes, which is what debt-to-income ratio restrictions are meant to do.
"We'll probably see a period where house prices do sneak up a bit but incomes rise too so some of these measures stay fairly stable. They might not be getting cheaper but they might not necessarily be getting massively more expensive either."
He said people seemed to be "waking up to the idea that ever-rising house prices isn't necessarily the best thing".
"A period where values are flatter could be a pretty good thing."
