New Zealand’s property market continues to show signs of recovery and stabilisation, with May bringing a slight softening in home values alongside encouraging signs for both buyers and sellers.
The latest data for May reveals a mixed but increasingly balanced outlook, supported by easing interest rates and growing buyer confidence.
Market stabilising after a tumultuous period
According to Cotality, national property values slipped just 0.1% in May, a far more modest shift compared to the sharper drops seen through late 2023 and early 2024. The rate of change has slowed considerably, and next month this drop could be reversed.
LJ Hooker Group Head of Network NZ Campbell Dunoon points out that although there is no rapid movement within the real estate market, the recalibration will take time.
“We’re seeing a clear shift from uncertainty to measured confidence,” Dunoon said.
“The rapid highs and steep corrections of recent years are giving way to a more sustainable, long-term outlook. For many buyers, especially first-home purchasers, this is a welcome return to predictability.”
National median values now sit at $818,132, which is 16.3% below the market’s peak in January 2022. However, Dunoon notes that longer-term value remains strong.
“Even with the price softening, values remain over 16% higher than pre-COVID levels. Those who purchased in 2019 or earlier are still in a strong equity position, while new buyers are enjoying more favourable entry points.”
Regional markets show divergence
While the national story is one of levelling off, regional performance has varied. Wellington saw the strongest rebound, with average asking prices climbing 12.9% year-on-year, now sitting at $828,531. This was largely due to a 32.1% drop in new listings, which tightened supply and put upward pressure on prices.
Southland also stood out, achieving a record-high average asking price of $564,291—a 6.5% annual increase. Other regions showing strength included:
- Taranaki: +13.1% year-on-year
- Otago: +7.4%
- Northland: +3.6%
Regional differences are driven by local economic factors, population movement, and lifestyle demand, Dunoon said.
“Regions like Wellington are regaining traction as the impact of public sector cuts— which had affected many in the capital—has eased, putting more certainty back into the housing market. Meanwhile, Southland and Taranaki are benefiting from affordability, regional investment, and a growing trend of city dwellers seeking lifestyle shifts.”
Auckland, by contrast, remains more subdued. Prices in the city dipped slightly in May, and while buyer interest is returning, the market is still in the early stages of recovery.
“Auckland is a slower ship to turn, but the fundamentals—population growth, infrastructure, job opportunities—remain strong. We expect more visible movement later in the year.”
Supply and demand begin to rebalance
Realestate.co.nz reports that new listings rose 2.9% year-on-year in May to 9,489, with total stock levels also up 5.6% compared to May 2024. Despite the increase in supply, buyer engagement remains healthy, especially in the sub-$800,000 segment.
“We’re seeing far more balanced conversations between buyers and sellers,” Dunoon says. “Vendors are adjusting to the current environment, and buyers are no longer rushing decisions. It’s a sign of a maturing market.”
Dunoon highlights that first-home buyers now make up 27% of all purchases—the highest share in over a decade. This rise is largely attributed to improved lending conditions, falling interest rates, and a stabilising job market.
“It’s encouraging to see first-home buyers leading the charge. They’re bringing fresh energy to the market,” he said.
Interest rate cuts fuel market optimism
The Reserve Bank of New Zealand (RBNZ) has recently cut the Official Cash Rate (OCR) by 25 basis points to 3.25%, marking its sixth consecutive rate reduction and setting the stage for further easing later in the year.
Retail banks have begun to cut their mortgage interest rates following the RBNZ's decision. The Bank of New Zealand (BNZ) cut its fixed and floating mortgage rates, with its 18-month offering falling to 4.89%. ANZ dropped its floating home loan rate to 6.49% and its flexible home loan rate to 6.60%. Westpac announced a special rate of 4.95% for home loan rates across one-, two-, and three-year terms.
“Mortgage interest rates are at a three-year low, and these lower borrowing costs are a significant factor in restoring market confidence. We’re seeing increased activity from both first-home buyers and investors who are taking advantage of these more favourable conditions.”
Looking ahead: a sustainable recovery?
While confidence is building, the outlook remains cautious. Economic headwinds, including inflation and the implementation of debt-to-income (DTI) restrictions later this year, are expected to temper rapid growth.Cotality’s Chief Property Economist Kelvin Davidson notes that while the bottom of the market may be near, a strong bounce-back is unlikely in the short term. Instead, modest growth or flat conditions are expected across much of the country.
Dunoon agrees with this measured outlook.
“This isn’t the return of double-digit annual growth—and that’s a good thing,” Dunoon said.
“What we’re heading into is a more sustainable market cycle, where long-term planning, quality property presentation, and sound financial preparation matter more than ever.”
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