A measured recovery in store for 2026’s property market

Saturday, 20 December 2025

New Zealand’s property market has spent much of 2025 catching its breath. Now with 2026 on the horizon the mood is finally lifting. But the reality is no property boom is coming.

So was 2025 as bad as we think?

That answer depends who you were and what bit of the property market you were in.

First home buyers had a blinder. The ongoing interest rate declines coupled with the falls in the official cash rate meant the first home buyers’ share of the market kept going up and up, until in some places, like Wellington, they were taking up over a third of the market.

And by October half of all first home buyers were getting in with a deposit as low as 20%. September saw them set a record for taking up 28% of all purchases nationally.

In fact, right across the country’s main centres, urban areas, and provinces, first home buyers’ market shares have recently been above historical averages, Cotality’s first home buyers report in November said.

It wasn’t too hard to work out why - Cotality NZ chief property economist Kelvin Davidson said first home buyers performed strongly in a market shaped by factors that currently benefit them, including increased choice and favourable LVR rules.

LJ Hooker’s head of research Mathew Tiller said first home buyers had led the market - particularly in the lower end of the market.

And hard on their heels are investors - mostly multiple mortgage property owners was up to 25.1% in October, the highest since April 2021.

They were slower to come back to the market but by the end of the year their share of the market was rising. Lighthouse Financial mortgage director Michael Vincent said about the middle of the year the phone had started ringing again.

Nevertheless, buyers were still cautious - first home buyers were older than ever before and sometimes waiting to get into the market at a higher price point rather than the bottom.

Great news for them, right?

If you were selling, you likely experienced a completely different market. In theory with so many first home buyers, there should have been plenty looking to buy.

But there was also a high degree of stock on the market so buyers could afford to be picky.

Throughout the year, sellers have had to navigate a market where prices have dropped and buyers had so much choice they could just walk away if they did not get what they want.

Tiller said while stock levels were also up, the increase in sales activity was keeping the market tighter.

The rental market shifted too - in part because of new rules like pet bonds - but also because there were more and more available on the market and landlords were having to work harder to get tenants and to keep them.

Rents fell little by little all year. New rental listings were up 12.4% year on year which was forcing landlords to work harder on presentation and pricing, especially for older or less efficient homes.

Tiller said for tenants and would-be first home buyers this is a welcome shift, easing pressure on budgets and making the rent versus buy decision more balanced when softer rents are paired with lower mortgage rates.

So where are the highs and lows around the country?

Let’s get the big lows out of the way - Auckland and Wellington had the weakest markets with Auckland’s median on $1,033,000 and Wellington’s on $767,500.

Tiller said there was cautious buyer sentiment and slow stop -start recovery especially in the capital.

But go south or into the regions and things look better. Canterbury had held firm over the year and both Christchurch and Dunedin’s showed gains with Christchurch up around 0.4% and Dunedin up 0.7% in October.

Southland, the West Coast and other provincial markets had also seen solid price growth, quicker days on market and steady interest from locals and investors chasing better yields than they can find in the main centres.

At the very top end, Central Otago Lakes has become New Zealand’s first region with an average asking price above $1,600,000 and Queenstown Lakes has set new record medians around $1,590,000, showing that premium stock is finding buyers again.

So what does 2026 hold? Well, it’s not going to be a boom.

For Tiller, it is broadly positive.

“Most forecasts point to low and stable mortgage rates next year, and that supports gradual, sustainable growth rather than a boom.

“We expect low to mid-single digit value growth nationally in 2026. That’s enough to encourage building and trading activity without reigniting affordability pressures.”

He said the key themes for 2026 included sustained first-home-buyer demand, investors adjusting to new compliance and tax settings, and the labour market finding its floor.

“Overall, 2026 looks set to be a better and more balanced year for the housing market.”