New Zealand property market: insights and outlook

For much of New Zealand, the last few years have been an exercise in treading water. While property values remain 24% higher than pre-COVID levels, they’ve dropped 13% from the dizzying heights of February 2022. The market initially responded positively to mortgage rate cuts, but economic headwinds quickly dissipated that momentum in 2025.

Auckland and Wellington have borne the brunt of the downturn, with average losses of around $300,000 – a significant hit to equity, especially for those who bought at the peak. At the other end of the scale, Queenstown-Lakes continues to outperform, remaining the most expensive region in the country by some margin.

Christchurch has held up better than other major centres, narrowing the gap with Wellington, which has struggled in just about every metric over the past five years.

Several key factors continue to stifle the market’s upward trajectory.

Migration is a key driver of housing demand, so it’s not surprising that the numbers paint a stark picture. In the year to July 2025, New Zealand gained just 13,700 people, down from 70,400 the year prior. Although international students are returning and new pathways for migrants are on the horizon, the influx of capital-rich buyers hasn’t returned to pre-COVID levels. This has had an impact not just on house prices but rental levels as well, which have softened in the main centres.

Mortgage repayments remain high relative to household income. As interest rates climbed in 2021 – without a concurrent rise in wages – many households were spending close to 45% of their income on repayments. Even with recent rate cuts, mortgage repayments as a proportion of the median household income are still above pre-COVID levels.

GDP and property values often move in tandem, making the housing market a useful bellwether for broader economic health. GDP growth was -0.9% in the June quarter – worse than expected – and businesses are deferring investment and hiring decisions. Nationwide, unemployment has crept above 5% (worryingly higher in Auckland), fuelling the exodus to Australia.

From a booming construction market during COVID to a glut of new properties: developers are sitting on around 16,000 unsold homes built since 2020. Some are being held as rentals, while others remain empty as owners wait for better market conditions. This surplus stock is holding back price growth, particularly in the townhouse segment where first-home buyers are most active.

It’s not all doom and gloom. Despite persistent headwinds, the data is starting to show glimmers of hope. Some quick numbers:

• Interest rates are coming down, with the Reserve Bank slashing the OCR by -0.5% in October and further cuts potentially on the way. We should see this start to have a material impact on households due to refix in 2026.
• Property values are rising, albeit slowly. 11 of 17 regions saw value growth in September, which may signal a turning point. 
• International students are returning, with volumes approaching pre-COVID levels. This will have a healthy impact on rental demand in university towns like Auckland, Hamilton, and Dunedin. 
• Job ads are climbing, the first year-on-year growth since late 2022. Meanwhile, jobs filled in August rose 0.2% from July.

Interest rate cuts rightfully get plenty of airtime, but they’re not the only driver in the mix. A number of factors have the potential to reignite the housing market over the short, medium, and long term.

Rate cuts take time to flow through to the wider market, but we can expect them to start making a real difference to owners and investors next year, with approximately $120 billion in mortgages due to be refixed in the next six months. Many borrowers who held out for lower rates in early 2025 will finally be able to take advantage of rate cuts in the first quarter of 2026.

Throughout 2023 and 2024, investors enjoyed term deposit rates of over 5%. These are now sitting at 3.45% or in some cases even lower. With the amount of term deposits maturing within six months reaching a record high in July 2025, investors who seek more favourable returns may look at alternatives, including the property market.

The Government’s changes to the Skilled Migrant Category Resident Visa make it easier for skilled workers – including tradespeople and technicians – to reside in New Zealand. While the changes won’t take effect until August 2026, the increase in capital base and demand for housing is good news for the rental market.

Changes to the Active Investor Plus Visa may also contribute to increased housing demand, with the minimum investment threshold reduced to $5m.

Major roading projects underway, like the SH2 Expressway in Hawke’s Bay and the Pegasus motorway north of Christchurch, will be significant drivers of regional growth, improving connectivity and unlocking development potential. These are long-term investments (due to be finished in 2029 and 2030 respectively) so their impact will take time to materialise.

After a rollercoaster period, could this be a turning point for the market? OCR cuts are likely to start having an impact, but affordability, low net migration, and oversupply remain key challenges. While the data shows signs of recovery, it will take time for buyers, sellers, and investors to feel the impact in the real world. Many will take a cautious optimism with them into 2026.