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New Zealand's housing market has softened through the middle of 2026, with fewer homes changing hands and prices drifting slightly lower. But it's hardly a dramatic downturn. Zoom out, and house prices have been largely stuck in the same place for the past three years.

Higher interest rates are making buyers think twice, while election uncertainty and the possibility of housing tax changes appear to be dampening investor appetite. At the same time, there's plenty of stock on the market, giving buyers more choice and reducing the pressure on prices.

Looking ahead, we expect house prices to be around 2% lower by the end of 2026. A gradually improving economy should help support the market next year, but for now the overall picture is one of a market that's moving slowly rather than making big gains or losses.

This quarter we're taking a closer look at 15 regions across New Zealand, and one trend stands out: Auckland and Wellington have generally lagged behind the national average over the past five years, while much of the South Island has performed more strongly.

That's partly because house prices in Auckland and Wellington had climbed much higher than other regions, and have spent recent years moving back towards more typical levels. Stronger regional economies, particularly in parts of the South Island, have also helped support demand.

These trends could continue in the short term, but some regional markets are now looking relatively expensive compared with local incomes and historical norms. That may make it harder for them to keep outperforming. Auckland, meanwhile, could be closer to stabilising as the economy improves.