Housing market idling and showing no signs of coming off the line
Thursday, 4 June 2026
New Zealand's housing market remained stuck in neutral in May, with property values barely moving as economic uncertainty, rising mortgage rates and cautious sentiment kept both buyers and sellers on the sidelines.
And a previously expected sales volume of around 100,000 might now struggle to improve on last year’s 90,000 transactions, Cotality NZ’s chief property economist Kelvin Davidson said.
New figures from Cotality showed the national median property value was unchanged in May at $808,187, continuing a sluggish pattern that has defined much of 2026 so far.
Values were down 0.1% over the past three months and down 0.6% compared with a year ago ‒ and 17% below the peak in early 2022 of $974,002.
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With neither buyers or sellers appearing willing to make the first move, Davidson said property values were generally stuck in neutral at the national level, with buyers in no major rush but sellers not having to capitulate either.
Auckland and Wellington continued to struggle, while some regional markets recorded modest gains.
Wellington was among the weakest of the main centres in May, with values across the region falling 0.3% for a median of $871,120. Within the capital, Wellington City recorded a larger monthly decline of 0.6%.
The picture was more mixed elsewhere in the region. Kāpiti Coast posted a 0.7% rise, while Upper Hutt gained 0.3% and Porirua increased 0.2%. Lower Hutt edged down 0.1%.
Davidson said Wellington's prolonged weakness reflected a combination of factors, including the sharp run-up in prices during the boom years, worsening affordability and a weakening local economy.
'An increase in physical property supply in some parts of the wider Wellington area will have played a role in the weakness of values in recent years. But it seems that the far bigger factors will have been the previous boom and sharp reduction in affordability.'
He said ongoing public sector job cuts were also weighing on confidence in the capital.
In Auckland there were small drops in value in May across the region except for Rodney, up 0.2%, and Franklin with no change. The average value was $1,046,164.
Davidson said the gaps weren’t huge, but Auckland City had still underperformed over three months, down 0.8%.
“But the supply pipeline of new townhouses across the supercity remains appreciable and this means purchasers are still in the box seat, whether they’re first home buyers, or even investors looking to expand their portfolio,” he said.
Across the country, Christchurch was one of the stronger main centres in May, rising 0.4%, while Dunedin and Tauranga both increased 0.2%
Looking ahead, he said there was still a tricky balancing act for the Reserve Bank to pull off, which will have effects on the property market.
“The longer the OCR stays on hold the greater the chances inflation is harder to rein back in again – which will tend to put more upwards pressure on mortgage rates.
“But the quicker they move, the higher are the chances of a marked weakening in the economy, with associated knocks to household confidence, the labour market, and also property sales and house prices.”
He said the housing market was not a direct consideration for monetary policy anyway, but in uncertain times it might still be caught in the cross-fire – with an OCR rise now looking likely in July.
“Of course, what’s potentially disappointing for some is great news for others, and first home buyers confident about their income and financial resilience should continue to find good opportunities in a market where listings remain elevated.”
However, Davidson said even the stronger markets were showing only modest growth rather than any signs of a sustained upswing.
'Key areas, including Auckland and Wellington, are still subdued, while even strong markets such as Christchurch or Invercargill aren't racing away.'
He warned that the housing market faced a number of headwinds in the months ahead, including higher borrowing costs and a weakening economy.
Interest rates have risen in recent months and could climb further, while consumer confidence and retail spending have both softened.
Although improved affordability should help limit any major downturn, Davidson said renewed falls in property values would not be surprising. The outlook for sales activity also remained subdued.
'All in all, housing market conditions remain challenging. This points to a sluggish outlook for values too.'