Buyers gain edge as Cotality maps flat housing values
New Zealand’s housing market has entered 2026 in low gear, with modest price falls and softer sales despite cheaper mortgages and improving affordability.
House prices still 17.5% below 2022 peak
Cotality NZ’s February 2026 Monthly Housing Chart Pack shows national median property values slipped a mild 0.3% over the three months to January, leaving prices 17.5% below their 2022 peak. Auckland and Wellington continued to underperform, while Dunedin, Invercargill, and parts of Canterbury proved more resilient.
Cotality NZ Chief Property Economist Kelvin Davidson (pictured) said the subdued pricing backdrop may frustrate some vendors, but it is tilting conditions in favour of 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,” Davidson said.
He added that “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.”
First-home buyers active as investors turn cautious
First-home buyers remain a key driver of demand, even though their share of purchases slipped from 28.3% in the fourth quarter to 26.2% in January. Davidson emphasised that volumes were still strong, describing it as “a slightly smaller share of a bigger pie.”
Mortgaged multiple property owners, including ‘mum and dad’ investors, also continue to provide a steady base of activity, supported by lower interest rates and reduced cashflow top‑ups on rental properties.
Sales, rents, and rates point to gradual recovery
Sales activity cooled at the start of the year, with January transactions across private sales and agency deals sitting 10.7% below the same month in 2025. Davidson remains relaxed about the pullback, pointing to strong December figures and possible timing effects.
“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.
The rental market has also shifted gears after several years of rapid increases. MBIE bonds data show the median national rent in the three months to December was 0.8% lower than a year earlier, with Wellington leading the declines, down about 10% to $582 a week.
“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,” Davidson 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.”
On the financing side, Alexander reported that more brokers are finding lenders willing to advance funds for home purchases, and that most borrowers now prefer two‑year fixed rates.
With affordability at its best level in years, mortgage rates easing and listings drifting lower, both Cotality and advisers expect 2026 to bring modest price gains and a gradual lift in sales, rather than a sharp new boom.
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