The number everyone quotes is incomplete
The figure most business owners have absorbed is a 17% fall from peak in nominal terms. It is real, but it hides the actual damage. Once inflation is stripped out, the true fall is 27% in real terms over 4.5 years. Relative to wages, consumer prices and business costs, the housing correction is far larger than the surface index admits.
Gareth Kiernan, managing director and chief forecaster at Infometrics, whose analysis of Infometrics and Cotality data across 75 years underpins the finding, says: “That makes the current downturn the second-biggest real drop that we’ve got in history across 75 years of data and the second-longest in terms of peak-to-trough.”
What it has already beaten
The benchmarks this slump has surpassed are sobering. The GFC downturn was a 15.8% real fall. The Rogernomics slump of 1984-86 was 9.4%. The only episode in three-quarters of a century that was worse than today is the Muldoon-era slump of 1974-80, a 38% real fall.
So why doesn’t it feel like a crash? Kiernan’s explanation is sharp: “What we’ve seen this time is it’s probably been a bit more broadly-based and a bit less concentrated in sort of selected parts of the economy. It’s just been a really sustained grind of a difficult period for the economy.” In 2008-09 finance companies and construction firms were visibly smashed. This time the pain is distributed and slow-moving. Newsroom’s June 2026 analysis found real prices back at mid-2019 levels, 55 months into the cycle and still 15% shy of the 2021 peak.
The 48,000 households carrying the loss
Kiernan identifies a specific, quantifiable group of losers: roughly 48,000 first home buyers who entered the market between June 2021 and December 2022, at or near the peak. His worked example makes the damage concrete. A buyer who paid a million dollars in 2021 would pay $850,000 today, meaning “$150,000 has been wiped off the value of their asset … three-quarters of their $200,000 deposit is effectively gone.” He calls it “the worst time to buy a home in 70 years” for that cohort.
For retail, hospitality and services businesses, that is 48,000 households across the main centres nursing balance-sheet damage and buying nothing they don’t have to. It is a durable drag on discretionary spending, not a temporary blip.
Still falling in July 2026
The market has not found a floor. Cotality data reported by RNZ shows the national median value at $804,303 in July 2026, down 1% over three months and 0.7% year-on-year. Wellington is down 3.1% over three months with buyers firmly holding pricing power, while Dunedin and Christchurch each edged up 0.2%. Kelvin Davidson, chief property economist at Cotality, confirms it: “The broader national downphase is the longest and deepest recorded in at least 30 or 40 years.”
Two risk maps, not one
The regional split is the part lenders and developers cannot ignore. Canterbury, Otago and Southland have clawed back their losses and made new highs. Everywhere else sits well below peak, and in real terms the gap is brutal: Auckland is 35% below its peak and Wellington 40% below.
That matters directly for security values. A Christchurch loan written at the 2021 peak may be fully secured today. An equivalent Wellington loan is sitting on a 40% real erosion of the underlying asset. Loan-to-value ratios calculated against nominal indices flatter the true position, particularly in the two biggest markets. New Zealand is also an outlier: the UK, US and particularly Australia have outperformed us over five years, which points to something structural rather than purely cyclical.
Why falling prices haven’t bought relief
Here is the twist that catches out anyone assuming cheaper houses means easier households. Stats NZ’s 2025 Housing in Aotearoa report found average annual housing costs hit $23,182 in the year to June 2024, up 31% from 2020, against disposable income up only 24%. The cost burden reached $22.20 per $100 of income. The 2021 boom locked buyers into high debt at high prices; falling values don’t refund that.
No one is calling a bottom
Davidson is cautiously optimistic that “values will almost certainly start to rise again at some stage … but this may be a story for next year.” The data still points down: prices fell 0.3% in July after a similar drop in June, Wellington is accelerating to the downside, and geopolitical uncertainty is adding to the caution. For lenders assessing collateral, developers weighing pipeline, and any business reliant on household spending, the message is the same. The correction is deeper and more geographically uneven than the 17% headline lets on, and it is not over yet.
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