New Zealand housing crisis: what’s really going on?

• A quick snapshot of the housing crisis
• What caused the crisis?
• Who is most affected by the housing crisis?
• What the Government is doing
• Is the housing crisis improving?
• What might help solve the crisis long-term?
• What this means for buyers, renters, and families right now

Despite house prices softening from their 2021/2022 peak, the fundamentals of New Zealand’s housing crisis haven’t shifted dramatically.

• According to the latest Trade Me Property Pulse Report, the national average asking price was $883,200 in October 2025, down from the $970,000 peak in early 2022. 
• Rents have softened too. Trade Me’s October 2025 Rental Price Index shows the national median weekly rent has fallen to $610, the lowest level since May 2023.
• Demand for social housing remains high. As at 30 September 2025, there were 19,431 applicants on the Housing Register (each applicant typically represents a household), down from around 26,868 applicants in March 2022*.
• Te Waihanga’s research shows that over the last 20 years, New Zealand has experienced faster growth in house prices than any other OECD country, and that all large and mid-sized cities now have median house prices well over five times median household income. 

While these indicators suggest things are moving in the right direction, experts warn progress will be slow. There’s debate over whether the term “crisis” still applies, but recent coverage notes that bank economists and housing advocates generally agree the situation is far from over. In short: the trend is improving, but it’s not something that will be fixed overnight.

*While the decrease in emergency housing numbers may appear to signal improvement, it is important to exercise caution when interpreting these figures. The new government policy, 'Tightening the gateway into emergency housing,' which came into effect in August 2024, has made it more difficult for people to access temporary accommodation. As the Ministry of Social Development analysis suggests, this policy shift can lead to a rise in rough sleeping and hidden homelessness, so the numbers alone do not tell the full story of housing need in New Zealand.

The numbers tell the story. With an average asking price of $883,200 in October, a typical 20% deposit comes to around $177,000.

Meanwhile, the median weekly earnings from wages and salaries in the June 2025 quarter were $1,380 before tax. And with the national median rent sitting at $610 per week, plus everyday costs like food, transport, and insurance, there isn’t much room left to save.

It’s easy to see why reaching that $177,000 deposit feels out of reach for many. Government support can help, but the path to home ownership remains a significant challenge for many households.

While rent prices have levelled off recently, the decade prior saw steep and consistent increases, making it hard for many renters to keep up. 

Demand for rentals has been high in recent years, although Trade Me data now shows easing pressure: listings are up and nationwide rental search activity is down compared to a year ago, which is helping to soften rents in some regions.

According to Stats NZ’s Housing in Aotearoa New Zealand 2025 report, Māori and Pacific peoples in particular “experience poorer housing outcomes, and higher rates of crowding and homelessness” than the general population. 

These inequities are longstanding and systemic, and show up across measures like overcrowding, unaffordable housing costs, and housing quality.

Renters face:

• Higher weekly costs relative to income than many owners. 
• Competition for limited stock in some regions, especially near jobs and transport.
• Higher rates of poor-quality housing, particularly cold, damp and poorly insulated homes. 

Roughly 600,000 households, about one-third of all households, are renting and many of the homes built before 1978 have inadequate insulation, although this should be improving with the roll-out of the Healthy Homes Standards and related regulations.

Despite more homes coming up for sale and prices hikes slowing, affordability remains the key barrier:

• Even with KiwiSaver withdrawals, and other Government assistance, most buyers struggle to get a deposit together.
• Recent bank disclosures and industry reporting suggest most lenders are still testing new borrowers at serviceability rates of around 7-7.5%.

The current Coalition Government has put housing near the top of its agenda, arguing that fixing the crisis is essential for productivity, the government’s balance sheet, and basic fairness between generations. Housing Minister Chris Bishop has set out a five-part programme covering planning reform, rental market changes, building and construction, social housing, and Resource Management Act (RMA) reform, with the flagship policy branded Going for Housing Growth.

• Freeing up more land for homes by requiring big councils to meet new Housing Growth Targets. Tier 1 and 2 councils will need to “live-zone” commercially feasible development capacity for at least 30 years of housing demand, rather than just a few years at a time. The aim is to flood the market with development opportunities so land prices and, over time, house prices come under pressure.
• Letting cities grow both up and out. The Government plans to strengthen intensification rules in the National Policy Statement on Urban Development (NPS-UD), especially around rapid transit and major transport corridors, while also making it easier to expand at the urban fringe. Rural–urban boundaries will be removed from plans and ministers are working towards a de facto “right to build” at the edge of cities where developers can cover the cost of infrastructure.
• Making better use of urban land. Councils will be required to enable more mixed-use neighbourhoods, with homes closer to shops, cafés, supermarkets and offices. They will also lose the ability to set minimum apartment sizes or mandatory balcony rules. The aim is to bring down the cost of smaller dwellings and give people more choice, particularly in central locations.

Alongside this, the Government will make the Medium Density Residential Standards (MDRS) optional for councils, on the condition that they still meet tougher growth and intensification expectations. Further changes to infrastructure funding and financing are on the way, with the stated goal that “growth pays for growth” so new development is not held back by the cost of pipes and roads.

A significant reform is the replacement of the complex, 30-year-old RMA with two new laws, introduced to Parliament on December 9, 2025:

• The Planning Bill: Will lay out how land can be used and developed, including planning for housing growth.
• The Natural Environment Bill: Will lay out the rules for managing the use of natural resources and protecting the environment.

In short, the policy direction is to radically expand where and how homes can be built, by opening up more land, loosening some planning controls, and asking councils to zone significantly more capacity than in the past. Whether this translates into the scale of new housing needed will depend on how quickly the reforms are implemented, how councils respond, and how developers and lenders react to the new rules.

There are some positive signs in the data. House prices have eased from their peak, rents have softened, and the social housing waitlist has reduced from crisis highs. But affordability remains stretched, affordable housing supply is still lagging behind demand, and families on low incomes continue to face some of the toughest conditions.

In other words: things are stabilising, but not solved. Most experts agree the crisis isn’t “over” and it's likely to take years to recover.

Based on research from Te Waihanga, HUD, and housing advocacy groups, there are a few changes that could make the biggest difference over time:

1. Freeing up more land for homes

Making better use of well-located urban land (especially near town centres and transport routes) would make it easier to build more homes in the places people want to live.

2. Improving planning and consenting

A faster, more consistent consenting system is essential for unlocking the tens of thousands of homes New Zealand needs. This includes stronger national direction for councils, more streamlined approvals, and simpler rules.

3. Better infrastructure

New housing can’t be built without water, roads, power, and community facilities. Continued investment is critical for supporting new developments, especially through tools like the Infrastructure Acceleration Fund and IFF financing.

4. Healthier, more secure rentals

The Healthy Homes Standards are lifting the quality of rental housing, but enforcement and continued improvements will be key to helping low-income households and families with children.

5. More social and affordable homes

Long-term affordability will depend on growing supply at all levels, including public housing, community housing, and Māori-led developments.

Rents have softened slightly, but remain high compared to incomes. With the overall supply of rentals still tight in some regions, healthy home standards, tenant rights, and budgeting tools remain important.

Housing quality and crowding issues continue to shape children’s health and wellbeing. Support is available through community housing providers, non-profit organisations, and government agencies for those living in unsafe or inadequate homes.