Are we going to see slower property growth in the future?

For a long time, property has been seen as a pretty safe bet when it comes to building wealth. We've become used to hearing stories about people buying a house and watching its value climb significantly over the years.

But could things be changing?

New analysis from Cotality suggests New Zealand might be heading towards a period of slower property price growth, and it's something worth thinking about if you're planning to buy a home or invest in property.

Over the past decade, New Zealand property values have increased by an average of 3.2% each year. That might sound reasonable, but it's quite a bit lower than the 6–7% annual growth rates we've seen over previous decades.

Cotality's Chief Property Economist, Kelvin Davidson, says there are a few reasons why property prices might not grow at the same pace we've become accustomed to.

One of the biggest is housing supply. In Auckland, for example, the number of homes has grown faster than the population since 2018. When there's more housing available, there's less pressure pushing prices upwards.

Interest rates are another factor. Over the years, mortgage rates dropped significantly from their historical highs. This meant people could borrow more, which helped push property prices up. We're unlikely to see that same long-term boost from falling interest rates again.

There are also other things to consider, including debt-to-income restrictions and potential changes to property tax rules.

Put simply, the property market is changing, and we may need to adjust our expectations.

Cotality suggests long-term property growth could settle somewhere closer to 3–5% a year, rather than the 6–7% we've seen historically. That doesn't mean property prices won't have periods of stronger growth. Markets will always have their ups and downs.

But it does mean it's probably not a great idea to buy a property assuming its value will shoot up over the next few years.

I think it's important to remember that buying a home is about more than its future value. It's about finding somewhere that works for you, understanding what you can comfortably afford and making sure your mortgage fits your lifestyle.

When you're looking at buying a home, it's easy to get caught up in the purchase price. But what will your repayments look like? How much will interest rates affect your budget? And will you still have enough room to enjoy life once the mortgage is paid each month?

These are the things worth looking at before you commit.

If you're thinking about buying, or would simply like to understand what your mortgage options might look like, I'm happy to talk you through it. A little planning now can make a big difference further down the track.