ANZ, New Zealand’s largest bank, has now publicly acknowledged that ongoing conflict in the Middle East is set to undermine what little confidence there was in the Kiwi housing market, leading to falling house prices this year.
In its latest Property Focus update, ANZ economists confirmed that before the outbreak of war, consumer confidence had been normalising after years of stagnation. They had even been forecasting a modest 2% price increase, although lower than earlier optimistic predictions of a 5% lift.
But with global oil prices surging and wholesale mortgage rates rising, that outlook has done a complete U‑turn. ANZ now expects house prices to fall by 2% over 2026, attributing the shift directly to the inflationary impact of higher energy costs and the knock‑on effects on borrowing costs.
Even without an increase in the official cash rate, the bank highlights that mortgage interest rates charged to borrowers have already climbed in recent weeks, squeezing households and reducing demand for property.
ANZ’s senior economist Matthew Galt stated outright that the conflict has knocked confidence out of would‑be home buyers and stoked broader fears about inflation.
Galt further warned of the possibility of even higher home loan rates if the conflict drags on, making borrowing more expensive. While he acknowledged that a resolution to the conflict could stabilise prices, ANZ’s central projection remains a small overall decline in the year ahead.
“Our hope is that we do see a de-escalation, and if we do, while we still expect mortgage rates to rise, that is likely to occur more gradually than if we see an escalation.”