Leading industry research group, Cotality, has predicted in its latest market report that prices could rise by up to 5% this year.
Lower mortgage costs and an improving economy would power the recovery, according to Kelvin Davidson, Cotality’s Chief Property Economist for NZ.
He said: “Debt-backed multiple property owners, including Mum and Dad investors, have been working their way back into the market, helped by lower mortgage rates and a full return of interest deductibility.”
As a result, he said, “property values look likely to start rising again – perhaps by 5%.”
Mr Davidson warned that labour market “sluggishness” remained the biggest challenge. The other unknown was political because NZ was now in an election cycle. Regulation, including likely debates around capital gains tax, would be a key area to watch, said Mr Davidson.
The future of bellwether market Auckland was also critical to any recovery. Its average values have tumbled 4.2% in the past 12 months.
Mr Davidson said: “Sentiment around Auckland’s housing market remains cautious, with buyers in the ascendency. Bullishness on the selling side still appears absent. That’s partly to do with the elevated stock of existing listings, but also the continued supply shift coming through from the townhouse development pipeline.”
Real estate experts agree 2026 is a critical year after the post-Covid downturn of 2022-23, and the stagnant mode the market has suffered in the past two years.
“All in all, 2026 may well be a stronger year for the housing market than 2025 – despite the headwinds. It’s the year of rebuilding confidence,” said Mr Davidson.
Cotality’s latest Home Value Index says NZ property values declined just 1% in 2025 to establish a median price of $808,430. That’s down 17.6% from the early-2022 peak that occurred in the immediate aftermath of Covid.
Confirming the stubborn nature of the current market, Cotality found prices slipped a further -0.2% in December, following a -0.1% dip in November.
National values have seen marginal drops in seven of the past nine months, which signals a great opportunity for buyers.
House prices have been flat (-0.7%) but small apartment values have been suffering most, falling -4.2%.
Here are six pieces of general advice for those planning to transact in the market this year:
Capitalise on your advantage – After two years of stagnation and a 17.6% drop from the 2022 peak, the market is expected to pivot. Owners should prepare for a transition from a buyer’s market to one where values could rise by up to 5%, making it a strategic time to list as optimism returns.
Monitor mortgage rates – If you are an investor, the full return of interest deductibility provides a significant financial incentive to re-enter the market or expand your portfolio. Ensure your financial structures are ready to take advantage of improved borrowing conditions.
Employment confidence – Success is likely to be linked to broader economic stability. If employment remains weak, buyer demand may stay “cautious” regardless of the low interest rates.
Political volatility – As 2026 is an election year, regulation will be a key area to watch. Owners should stay informed about political debates. Policy shifts can cause sudden changes in buyer behaviour.
Not all property is equal – The market may not recover uniformly. If you own an apartment, you may need to be more patient or realistic with your pricing to compete in a crowded market.
Auckland factor – With a high supply of new townhouses, sellers in Auckland face competition. As in any market with these dynamics, sellers should focus on highlighting unique value propositions to stand out against the elevated stock of existing listings.