Property market starts to even out as year ends

Tuesday, 9 December 2025

There are signs that the property market has hit smoother waters with the hope of growth in the New Year.

New Zealand’s housing market will end 2025 in better shape than it began, with prices stabilising and activity lifting after a long, uneven downturn.

LJ Hooker head of research Mathew Tiller’s year in review report said data now pointed to a market that has stopped going backward, with confidence improving on the back of lower interest rates, easing inflation and more active buyers.

“The conversation has shifted from ‘how bad’ to ‘how long’ before momentum builds,” Tiller said.

Cotality’s home value index was flat in November - it was zero growth - after two months of modest gains, leaving the national median around $807,000.

Values remained roughly 15% below their 2022 peak, but the pace of decline has halted, Tiller said.

Sales were also recovering with the Real Estate Institute reporting a 6.4% annual lift in October, while new listings rose 10.9% in November, giving buyers more choice and helping ease elevated stock levels.

“We’re seeing better sales volumes slowly chip away at rising stock levels,” Tiller said.

“That usually sets the stage for firmer conditions in the next phase of the cycle.”

Tiller said the year had been defined by caution, but that sentiment was now changing.

“At the start of 2025 households were still feeling the weight of rising living costs, a soft labour market and inflation sitting at the upper end of the RBNZ’s target,” he said.

But aggressive rate cuts and easing inflation improved conditions heading into summer.

The Reserve Bank reduced the official cash rate this year to 2.25%.

“Markets and forecasters agree the low point is close – the question is how long rates stay low,” Tiller said. Annual inflation currently sits at 3%, with further falls expected into 2026.

More supply and slower population growth had taken the heat out of the rental sector. Realestate.co.nz data showed the national average weekly rent fell 3.1% year-on-year in November to $626, while rental stock rose more than 17%.

“For tenants and first-home buyers this helps rebalance budgets at the same time mortgage rates are falling,” Tiller said.

Auckland and Wellington, which saw the deepest falls early on, remained well below 2022 peaks. Auckland’s median rose 3.6% in the year to October to $1.033m, while Wellington’s dipped 3.5% to $767,500.

Tiller said markets further south were firmer. Canterbury posted a 1.4% annual rise to $710,000, with Christchurch and Dunedin among the strongest monthly performers. Premium tourism and lifestyle areas continued to lead the country, with Central Otago Lakes now averaging above $1.6m.

First-home buyers have been the dominant force in 2025, accounting for a record 27.7% of purchases in the September quarter. Lower prices, lower mortgage rates and more flexible lending rules have opened a window of opportunity, Tiller said.

Existing owners are gradually returning to the market, particularly families trading within mid-range brackets. Investor activity remains subdued but is also improving.

Tiller said most predictions were for modest price growth and steady confidence through 2026 with the market now transitioning from stabilisation to early-stage recovery.