Beyond the flatline: The housing market is far more complex than headline figures suggest
Sunday, 12 July 2026
ANALYSIS: The wait for the housing market to recover from its prolonged downturn is not over yet, with the latest data showing prices continue to flatline and sales have softened.
But conditions are more complex than headline figures suggest, and the quieter, more stable market could be the “new normal”, industry insiders suggest.
There’s been renewed focus, domestically and internationally, on the decline in New Zealand’s house prices, how far they have fallen from the market peak in early 2022, and how long the slump has gone on for.
The fall in prices from the market peak has been dramatic. Cotality’s latest Home Value Index put the national median value at $806,512 in June, and that’s 17.5% below the peak.
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It’s also 0.9% down annually, and that reflects renewed softness in prices which Cotality’s data shows have been edging lower in recent months.
The story is similar for many regional markets. Auckland’s median of $1.04 million is down 23.6% from the peak and 2.8% annually, while Wellington’s median of $774,273 is down 26% from the peak and 1.8% annually.
But Cotality’s chief property economist Kelvin Davidson says median prices around the country remain up, and in many cases, significantly so on pre-Covid prices.
In June 2019 the national median was $635,726, while Auckland’s was $895,990, Wellington’s was $675,270, and Christchurch’s was $450,861.
That means the current national median is 26.9% higher than in 2019, he says. “Auckland and Wellington’s medians are 16.9% and 14.7% above 2019, while in Christchurch the median is now 56.7% higher than pre-Covid.”
The north v south divide
There are also some regional differences, he says. Prices in southern centres such as Christchurch, Queenstown, and Invercargill are now just 1.6%, 0.3% and 3.3% below their peaks, and their prices are up on June last year, for example.
For Opes Partners economist Ed McKnight the divergence between North and South Island markets is a game of two halves, with some southern markets already in the recovery phase.
People tend to look at the national market figures, which have been flat for some time, and think nothing is happening, but it’s not that simple, he says.
“In Auckland and Wellington, where many people live, prices are flatlining or dropping, and that pulls the national figure down. But if you look deeper, there’s quite a lot happening in many local markets.
“Many areas have hit their bottoms, and prices are either inching up or hovering around a certain point. Some, such as Invercargill and Christchurch, are doing well.”
Sales activity well into recovery
While most commentators agree a return to fast-rising prices is not on the cards any time soon, it’s a different matter when it comes to sales.
McKnight believes the downturn in sales that followed the Covid era market boom is over, and recent sales figures suggest the market is not far off achieving the long-run annual sales average this year.
Cotality puts the long-term average at 91,000 to 92,000 sales a year. It also shows that sales fell to an annual tally of 67,000 at the market’s trough in 2022.
There’s no doubt sales have recovered since then, but there has been a loss of momentum in recent months. Davidson says they’re forecasting sales of about 91,000 this year, but that’s dialled back from an earlier forecast of 100,000.
“Sales have been getting softer since the start of the year, even prior to the Middle East conflict, which shows there was still caution out there.
“Listings remain high, so buyers have the power, sellers are not rushing to market, and activity has slowed, but sales are at a fairly middle of the road level, rather than being high or low.”
Meanwhile, economist Tony Alexander’s latest survey of real estate agents has a net 31% saying they are seeing fewer people at auctions, and a net 27% reporting fewer people at open homes.
Those results are weaker than before the Middle East conflict, but they are an improvement on April and May’s results, Alexander says in his report. “The direction of change is positive but there’s a long way to go.”
Ray White New Zealand head of performance Ben East says its sales activity remains consistent when compared to last year, with success rates, including at auction, similar.
“We've been looking for stability, rather than big ebbs and flows, so that’s positive. It’s beneficial for buyers and sellers as it reduces fears of overcapitalisation or underselling.”
With the volatility removed the outlook is more stable, and unlikely to change soon, and that gives everyone active in the market more confidence, he says.
So, what does it all mean?
The current market is subdued compared to the over-heated Covid-era market, and it’s no longer characterised by skyrocketing prices.
But the fact that house prices are not rising strongly does not make it a bad market, McKnight says.
“It is normal to have long periods of static prices, especially after the sort of boom seen between 2020 and 2022. Markets go through cycles.
“It is now a buyers’ market with lower prices, and first home buyers are making the most of it. They haven’t had such a big share of purchases for many years.”
Cotality’s latest data shows first home buyers accounted for 28.5% of purchases over April and May combined. That’s a record high, and well up on the long-term average of 21.8%, based on records going back to 2005.
One reason for this is improved affordability. In June the annual Demographia international housing affordability report put Auckland as the 15th least affordable market in its rankings, up from fourth least affordable.
Now, Massey University’s biannual Home Affordability Report is out, and it shows national home affordability improved for a second consecutive quarter, with every region recording improved affordability during the March 2026 quarter.
Lower mortgage interest rates, softer house prices in many regions and continued income growth contributed to the stronger affordability outcomes, according to the report.
McKnight says lower prices are not such a good story for investors looking to sell who won’t have as much equity as they would have had in 2022.
“And first home buyers who bought at the peak of that crazy market won’t be happy as their equity has been wiped out as prices have gone down. It depends on what point buyers are at in their journey.”
But Davidson has observed a change in the broader mindset around prices, with less focus on ever-escalating prices, and more on affordability.
The big picture is the market trajectory is going sideways, although if the US/Iran deal holds and interest rates come down a bit of an upturn might emerge, he says.
“It won’t be straight away due to uncertainty, and the question is - is this the new normal for the market? Maybe prices won't necessarily just go up relentlessly any more.”