New Zealand Air Source Heat Pump Market By Process (Air to Air, Air to Water), By End Use (Residential, Hotels & Resorts, Gym & Spas, Educational Institutes, Food Service, Others), By Distribution Channel (Direct, Indirect), By Region, Competition, Forecast & Opportunities, 2020-2030F

Market Overview

New Zealand Air Source Heat Pump market was valued at USD 9.26 Million in 2024 and is expected to grow to USD 13.67 Million by 2030 with a CAGR of 6.71%. The New Zealand Air Source Heat Pump market is driven by multiple interrelated factors. The country's high humidity levels, particularly in regions like Auckland with an average annual humidity of 82%, have increased the demand for efficient dehumidifying solutions. ASHPs, capable of operating in cooling or "dry" modes, effectively combat excess moisture, enhancing indoor air quality.​Government-led housing initiatives, such as the Mangere project in Auckland, aim to replace approximately 2,700 state housing units with up to 10,000 new healthy homes over the next 10-15 years. This surge in construction projects boosts the demand for energy-efficient heating solutions like ASHPs.​ Also, the energy efficiency of ASHPs is a significant driver. They are more than 500% efficient, producing over five units of heat for every unit of electricity consumed, making them a cost-effective alternative to traditional heating systems.​ Also, the integration of ASHPs with renewable energy sources, such as solar or wind power, aligns with New Zealand's sustainability goals, further propelling market growth. Collectively, these factors contribute to the expanding adoption of air source heat pumps across New Zealand.

Key Market Drivers

High Humidity Level Across the Region

​High humidity levels across many regions of New Zealand, especially in coastal and northern areas like Auckland, are a significant driver for the country’s air source heat pump (ASHP) market. As a part of this, according to a recent study, as of 2023, New Zealand’s annual average temperature has increased by 1.26 degrees Celsius, based on linear trend analysis assessed at the 95 percent confidence level. With average annual humidity levels often exceeding 80%, residents face issues such as dampness, mold growth, and reduced indoor air quality. Traditional heating systems may not adequately address these concerns, whereas ASHPs offer an efficient solution through their ability to operate in "dry" or dehumidifying modes. These systems not only regulate indoor temperature but also extract excess moisture from the air, contributing to healthier and more comfortable living environments. This dual functionality makes ASHPs particularly appealing in regions prone to year-round humidity. As consumer awareness of indoor air quality grows, and health-conscious choices become more prevalent, the demand for ASHPs as both heating and dehumidifying solutions is expected to increase steadily.

Booming Residential Sector Across the Region

​ ​The booming residential sector in New Zealand is a significant driver for the air source heat pump (ASHP) market. As a part of this, according to the Ministry of Business, Innovation & Employment, between June 2022 and June 2023, the value of residential building work completed increased by 12.5% and 18.5%, respectively. Government-led housing initiatives, such as the Mangere project in Auckland, aim to replace approximately 2,700 state housing units with up to 10,000 new healthy homes over the next 10–15 years. This surge in construction projects boosts the demand for energy-efficient heating solutions like ASHPs. Also, the growing preference for new homes, coupled with an increase in construction activities, is propelling the demand for ASHPs across the country. Builders and developers are increasingly incorporating these systems into new residential projects to meet energy efficiency standards and provide cost-effective heating solutions. The integration of ASHPs in the residential sector not only aligns with New Zealand's sustainability goals but also offers homeowners long-term energy savings, making them an attractive option in the evolving housing landscape.

Expansion of Hotels & Resorts

The expansion of hotels and resorts across New Zealand is significantly propelling the demand for air source heat pumps (ASHPs). As a part of this, as of April 2025, Accor, plans to build 10–20 hotels in New Zealand over the next five years, a move expected to greatly impact the hospitality sector. As the hospitality sector grows, there's an increasing need for efficient, sustainable, and cost-effective heating and cooling solutions. ASHPs provide both heating and cooling capabilities, making them ideal for maintaining comfortable indoor environments year-round. Their high energy efficiency not only reduces operational costs but also aligns with the industry's push towards sustainability and reduced carbon footprints. Also, the compact design and quiet operation of modern ASHPs make them suitable for retrofitting in existing structures without compromising guest comfort. The ability to control temperatures in individual rooms enhances guest satisfaction, a critical factor in the competitive hospitality market. As hotels and resorts continue to prioritize energy efficiency and environmental responsibility, the adoption of ASHPs is expected to rise, further driving market growth in New Zealand.

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Key Market Challenges

Lack of Standardized Regulation

​ One of the key challenges facing the New Zealand air source heat pump (ASHP) market is the lack of standardized regulations and performance benchmarks. Currently, there is no unified national framework to guide the installation, efficiency standards, or long-term performance of ASHP systems. This regulatory gap leads to inconsistencies in product quality and installation practices across regions, potentially undermining consumer trust and satisfaction. Without clear standards, consumers may find it difficult to differentiate between high- and low-performing systems, increasing the risk of suboptimal purchases. Also, the absence of enforceable guidelines can result in poorly installed systems that fail to deliver promised energy savings or climate control. This not only affects end-user experience but also slows market adoption. Introducing standardized regulations would help streamline quality assurance, enhance consumer confidence, and support the long-term sustainability and efficiency goals of New Zealand’s heating market.

Limited Awareness in Rural & Low-Income Areas

​Limited awareness in rural and low-income areas presents a significant challenge for the New Zealand air source heat pump (ASHP) market. Many residents in these regions are either unaware of the benefits of ASHPs or perceive them as financially out of reach due to the higher upfront costs. This lack of understanding can prevent potential customers from considering ASHPs as a viable and energy-efficient alternative to traditional heating methods like wood burners or electric heaters. Also, limited access to information and qualified installers in more remote areas can exacerbate the challenge. As a result, the adoption of ASHPs remains lower in these regions, hindering the broader market growth. Educating these communities about the long-term savings, environmental benefits, and available government incentives for ASHP installations is crucial to overcoming this barrier and expanding market penetration across the country.​

Key Market Trends

Government Incentives and Support

Government incentives play a pivotal role in advancing the adoption of air source heat pumps (ASHPs) in New Zealand, particularly through the Warmer Kiwi Homes programme. This initiative, administered by the Energy Efficiency and Conservation Authority (EECA), offers substantial subsidies to eligible homeowners. Grants cover up to 80% of the cost of installing approved heat pumps, with a maximum cap of $3,000 including GST. To qualify, applicants must own and reside in a home built before 2008, have ceiling and underfloor insulation that meets EECA standards, and meet specific criteria such as holding a Community Services Card or residing in a low-income area. This financial support significantly reduces the barrier to entry for households seeking energy-efficient heating solutions, thereby accelerating the transition to more sustainable home heating options across the country.

Integration with Renewable Energy Systems

The integration of air source heat pumps (ASHPs) with renewable energy systems is a prominent trend in New Zealand’s heating market. This integration aligns with the country’s sustainability goals, allowing homeowners to harness clean energy to power their heating systems. ASHPs are increasingly being paired with solar photovoltaic (PV) systems, enabling homes to use excess solar energy to operate the heat pumps. This reduces reliance on the grid, lowers energy costs, and enhances energy independence. Also, advances in inverter technology have made it possible for ASHPs to operate more efficiently across various outdoor temperatures, further improving energy savings. As more homes and businesses adopt renewable energy, the synergy between ASHPs and renewable systems is expected to grow. This trend not only supports New Zealand's transition to a low-carbon economy but also helps consumers reduce their carbon footprints while lowering long-term heating expenses.

Environmental-Friendly Refrigerants

​The New Zealand air source heat pump (ASHP) market is increasingly adopting environmentally friendly refrigerants as part of a broader trend towards sustainability. Natural refrigerants such as R290 (propane) and R744 (CO₂) are gaining popularity due to their low Global Warming Potential (GWP) and minimal environmental impact. For instance, R290 has a GWP of just 3, making it a preferred choice for manufacturers aiming to reduce greenhouse gas emissions. Products like the Apricus All In One Hot Water Heat Pump and Domusa Dual Clima HT Air-to-Water heat pump utilize R290, aligning with eco-conscious consumer preferences. Similarly, the Reclaim Energy hot water heat pump employs CO₂ as a refrigerant, offering excellent cold-weather performance without the need for supplementary electrical heating. This shift towards natural refrigerants is further supported by government initiatives, including the phased prohibition of high-GWP HFCs, reinforcing New Zealand's commitment to reducing its carbon footprint.

Segmental Insights

End Use Insights

Residential dominated the New Zealand Air Source Heat Pump market, due growing consumer demand for energy-efficient and cost-effective heating solutions. With rising electricity prices and increased awareness of environmental impact, homeowners are increasingly turning to ASHPs for their ability to provide both heating and cooling efficiently. Government incentives, such as subsidies and rebates, further support ASHP adoption in residential areas. Also, ASHPs’ versatility, ease of installation, and long-term savings on energy bills make them an attractive choice for homeowners, leading to their widespread use in new builds and retrofit projects across the country.

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Regional Insights

North Island dominated the New Zealand Air Source Heat Pump market, driven by several key factors. This region encompasses major urban centers such as Auckland, Wellington, and Hamilton, which collectively account for a substantial portion of the country's population and housing stock. Urban areas typically exhibit higher energy consumption and a greater demand for efficient heating solutions, making ASHPs an attractive option for homeowners seeking cost-effective and sustainable alternatives to traditional heating methods. Also, the North Island experiences higher humidity levels, particularly in cities like Auckland, where the average annual humidity is approximately 82%. ASHPs' capability to dehumidify indoor air enhances indoor air quality, addressing concerns related to dampness and mold growth. Also, government-led housing initiatives, such as the Mangere redevelopment project in Auckland, are replacing existing state housing units with new, energy-efficient homes, further boosting the demand for ASHPs in the region. These combined factors contribute to the North Island's dominance in the ASHP market. 

Recent Developments

• In July 2024, Calitec Hot Water Systems, a leading New Zealand-based provider of heat pump water heating solutions, launched its newest innovation, the WH-70 Water Heater, at the BuildNZ 2024 trade expo. This event will be held on 25-26 June at the Auckland Showgrounds.
• In August 2024, Daikin New Zealand is expanding with two new purpose-built facilities in Auckland and Christchurch to enhance service and meet growing demand. Daikin Park, located on a 12,150m² site in Mt Wellington, will consolidate the company’s Auckland operations and become the largest HVAC warehouse in the country. A new facility in Christchurch will begin construction in 18 months to support the expanding South Island market.

Key Market Players

• Rheem New Zealand Limited
• Daikin Air Conditioning New Zealand Limited
• Black Diamond Leisure Ltd
• Panasonic Asia Pacific Pte., Ltd
• Artimus Limited
• Barilla Ltd
• The Electric Heating Company Ltd
• Enula
• Cinergi Ltd
• Go Geothermal Ltd

Report Scope:

In this report, the New Zealand Air Source Heat Pump Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

•   New Zealand Air Source Heat Pump Market, By Process:

o   Air to Air

o   Air to Water

• New Zealand Air Source Heat Pump Market, By End Use:

o   Residential

o   Hotels & Resorts

o   Gym & Spas

o   Educational Institutes

o   Food Service

o   Others

• New Zealand Air Source Heat Pump Market, By Distribution Channel:

o   Direct

o   Indirect

• New Zealand Air Source Heat Pump Market, By Region:

o   North Island

o   South Island

Competitive Landscape

Company Profiles: Detailed analysis of the major companies presents in the New Zealand Air Source Heat Pump Market.

Available Customizations:

New Zealand Air Source Heat Pump Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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