Weak start to the year for housing market
Monday, 16 February 2026
New Zealand’s housing market started the year with little momentum, with new Real Estate Institute data putting sales in January at their lowest level in 18 months, economists say.
The institute's latest data was out on Monday, and it showed there were 3837 sales nationwide last month, down by 5.4% from 4058 at the same time last year. Once seasonally adjusted, they were down 8.9% on December.
Around the regions, sales activity was a mixed bag, but on an annual basis sales in Auckland and Canterbury were down 1.2% and 8.6% respectively, while in Wellington they were up by 0.6%.
Prices were more stable with the national median price up 0.4% to $753,106 from $750,000 in January last year, and in nine regions - including Auckland and Canterbury - median prices were up annually.
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But the institute’s house price index, which smooths out variations from sales figures, was down 0.7% on the same time last year, and down 0.6% on December. It is now 16.2% below the market peak.
Real Estate Institute chief executive Lizzy Ryley said the data showed stable pricing alongside softer activity, suggesting confidence was rebuilding gradually rather than accelerating quickly.
That was likely to reflect a combination of seasonal holiday conditions and unusual, severe weather across parts of the North Island and East Coast, she said.
“Over the coming months, the market is expected to continue progressing gradually, with confidence rising ahead of any increase in transaction activity.
“While conditions are likely to remain cautious, the outlook suggests momentum building steadily.”
But economists were less positive in their assessment.
Infometrics chief forecaster Gareth Keirnan said house sales in January were at their lowest level in 18 months, and the fall in sales was felt across the country, while prices remained weak.
Poor summer weather might have contributed to the market’s weak start to 2026, but the market was struggling despite significant falls in mortgage rates over the last two years, he said.
“Weak population growth, the soft labour market, sluggish consumer confidence, difficult affordability conditions, and low rental yields are all constraining demand for housing.
The fact that, even in the South Island, activity levels are coming under pressure, suggests that a stronger economy might not translate into a housing market recovery.”
Infometrics expected prices would rise by 0.7% over the coming year, a prediction that was currently at the bottom of the forecast range, he added.
ANZ senior economist Matthew Galt said sales volumes were well below their historical average, and while prices were rising in Southland and Otago they were flat or falling elsewhere - with particular softness in Wellington and Auckland.
The shift in the outlook for interest rates late last year looked to have cooled the market, as the possibility of further OCR cuts had given way to questions about how soon the OCR would rise, he said.
“We expect 2026 will be another year of little movement in prices and we are forecasting prices will rise just 2% by year end.
“While the general economic recovery is providing a tailwind, the market is starting the year with little momentum, and rising interest rates and election uncertainty are set to be important headwinds.”
Westpac senior economist Michael Gordon said the data showed the market was soft at the start of the year, giving back the apparent improvement in the December figures.
“Low mortgage rates are supporting demand, but the ample supply of homes on the market, low population growth and falling rents mean there is a lack of upward pressure on prices.”
The situation did remain very mixed across the country, with the more rural regions faring better than the main centres, but Westpac had downgraded its price forecast to a 4% rise over 2026, he said.
“While we expect GDP growth to be noticeably above trend this year, we expect a much more muted than usual reaction in house prices, as significant stock is available for sale.
“The pickup in building consents also suggests a robust supply of new houses through 2026 and 2027. In addition, population growth is expected to remain subdued, albeit with a modest lift in net migration.”