Homeownership has long held a significant position in the New Zealand housing system and housing represents the single most important component of household wealth in the country. Liberalised mortgage markets and the growing fungibility of housing as an asset have meant that housing is increasingly viewed as a key component in the development of asset-based welfare programmes and is viewed as particularly important for aging populations. Outright homeownership reduces the prospect of poverty in old age and is popularly believed to offer the opportunity for aging homeowners to downsize (i.e. move to a smaller or lower value dwelling) and release equity. Notwithstanding the power of the ‘ideology of homeownership’ to shape housing policy and individual household decision-making, the opportunities for in-situ aging or downsizing are constrained by the nature of the housing stock and the dynamics of house prices. In this paper we review issues relating to downsizing and house price dynamics in New Zealand. This paper offers preliminary findings from one research stream of a large-scale multi-disciplinary research project entitled ‘Housing, Downsizing and Older people in a Changing Society’.