New Zealand's housing market is showing signs of stabilising as rising interest rates continue to place mounting pressure on prospective buyers. The Reserve Bank's decision to lift the cash rate by 0.25 percentage points to 4.35 per cent this week has reached its highest level since February 2025, significantly reducing the borrowing capacity of house hunters across the country.

Property data firm Cotality reports that demand is softening and growth is slowing across mid-sized capitals, with real estate agents noting increased uncertainty and hesitation among buyers. Despite the cooling conditions, agents maintain there is still strong underlying demand in what remains a tight market. Prospective homebuyers are being forced to re-evaluate their budgets as climbing interest rates curb their purchasing power, creating a more challenging environment for first-time buyers and existing homeowners looking to upgrade.