New Zealand’s property market has started 2026 in a subdued fashion with little movement in prices and lower sales transactions despite improved affordability, more favourable mortgage rates and a gradually strengthening economy.
Cotality NZ Chief Property Economist Kelvin Davidson said the flat performance in property values may disappoint some vendors, but it offers improved opportunities for buyers.
“The predictability of current conditions is reassuring for buyers, who are continuing to adjust to the recent experience of stable prices and lower mortgage rates,” Mr Davidson said.
“With affordability gradually improving and employment conditions set to strengthen slowly this year, there’s a growing sense of cautious optimism, even if the recovery will be measured rather than sharp. Debt to income ratio caps remain important to watch.”
Cotality data shows first home buyers’ market share dipped in January from 28.3% in Q4 to 26.2%, however Mr Davidson said the number of deals occurring remained strong. “This was a slightly smaller share of a bigger pie.”
Mortgaged multiple property owners, including ‘Mum and Dad’ investors, were also a steady influence in the market likely due to lower interest rates and reduced cashflow top-ups on rental properties.
Softer sales in January likely a blip in upwards trend
January sales volumes, measured across both private deals and real estate agents, were -10.7% below the same month in 2025, marking only the third fall in the past 33 months.
Mr Davidson was unconcerned about the sluggish start to the year, because there’s a suspicion that some deals may have been rushed through into December (which saw strong growth), artificially subduing the figures for January.
“If you take December and January together, the upwards trend remained in place. We’d expect to see more sales growth activity in 2026 on the back of reduced mortgage rates and a recovering economy,” he said.
“Our Buyer Classification data also showed hints of more activity from relocating owner-occupiers, or movers. It’s early days and not a trend yet. But a slowly recovering economy could lift movers’ confidence to trade up, reinforcing the prospect of more housing activity this year.”
Rents reset after years of growth
New Zealand’s rental market has softened as net migration has fallen sharply and the number of properties available to rent remains elevated. With rents already stretched relative to incomes and wage growth easing, Mr Davidson said there is limited scope for further increases and that recent falls, while rare, reflect a reset after a period of very strong growth.
The MBIE bonds data shows in the three months to December the median national rent was 0.8% lower than the same period a year earlier. Wellington recorded one of the most significant changes in median rent, down about 10% to $582 a week. Hamilton and Tauranga have also recorded declines, while Auckland has edged slightly lower. Christchurch and Dunedin have held up better with modest growth recorded.
“Rents rose quickly when migration was surging and supply was tight. Now there are more listings, population growth has slowed, and tenants simply don’t have the capacity to keep absorbing large increases,” he said.
“It’s hard to see a sharp rebound from here. The more likely path is a period of flat or only very modest growth while the market adjusts.”
Confidence slowly rebuilding
As lower mortgage rates and improved affordability begin to provide some confidence for both buyers and sellers, Mr Davidson said it was likely behaviour would shift, activity would improve and 2026 would be a year of gradual growth for sales and prices.
“Affordability has improved to its best position in several years, mortgage rates have eased, and listings are gradually drifting lower. Those factors combined are helping to steady the market and should support a lift in sales activity through 2026,” he said.
“Other considerations include borrowers who are rolling off higher fixed rates onto cheaper loans, which will help free up cashflow for some households and should the labour market slowly gather steam as expected, that sets the scene for modest price growth rather than a sharp rebound.”
The Cotality NZ Monthly Housing Chart Pack, February 2025 provides the latest breakdown of sales, listings, mortgage lending activity, buyer classification, property values, rental trends, and economic indicators.
