Jobs, inflation, and rates set housing market tone
House prices across New Zealand mostly drifted lower in 2025, but not everywhere.
New figures from the Cotality Home Value Index show another year of sluggish growth overall, even as a handful of main centres quietly notched up gains.
At the same time, early signs of a stronger economy, improving employment, and rising building activity are setting the stage for what could be a rebuild in market confidence in 2026.
Chief economist Kelvin Davidson (pictured) of property insights firm Cotality, who wrote this analysis for OneRoof, says December’s data showed “more of the same” for values, as conflicting forces of lower mortgage rates and a weak economy continued to push and pull the housing market.
Here are the five key things you need to know about the housing market this week – and how they could shape prices in the year ahead.
National house prices dipped again – but some cities still rose
Property values were in the red again in 2025, with the Cotality Home Value Index recording a modest monthly drop of 0.2% at the national level in December, and a mild annual fall of 1.0%.
These headline numbers reinforce the picture of a market drifting rather than surging since the major downturn of 2022–23. Davidson says 2025 was another sluggish year for values, following a similarly subdued 2024, as the market adjusted to earlier price falls and higher interest rates.
Beneath the national average, however, the main centres told a more mixed story:
- Christchurch’s median property value was up 2.6% in 2025
- Tauranga’s median property value was up 1%
- Wellington’s median property value fell 2%
- Auckland’s median property value fell 2.6%
Christchurch and Tauranga effectively bucked the national trend, while Auckland and Wellington led the declines among the main centres.
Looking ahead, Davidson expects an improved economic outlook in 2026 to start feeding into prices. He sees modest growth in property values, with national values potentially rising by around 5% on average, even if some regions remain softer than others.
Rising employment could be the confidence trigger
A critical piece of the housing puzzle this year will be jobs. After a quiet period for fresh data over the holidays, the flow of economic information resumes this week, starting with Stats NZ’s November figures on filled jobs.
There have been tentative hints in the past couple of releases that firms may be looking at hiring activity again, so there’s hope for more of the same in the latest data.
Rising employment certainly feels like “a core component of getting confidence and wider economic activity back on its feet.” If job growth does pick up, that typically supports housing demand and strengthens borrowers’ ability to service mortgages, which can help stabilise or gently lift prices after a downturn.
Are borrowers about to start fixing mortgage rates for longer?
Another key data release this week will give a window into how borrowers are thinking about interest rate risk. On Friday, the Reserve Bank will publish November’s data on loan terms chosen by new borrowers.
Generally speaking, floating rates or 6–12 months fixed terms have remained popular over the previous few months – and this may well have remained the case in November.
But if mortgage rates have truly troughed, it’ll be fascinating to see what households do in 2026. There’s already been plenty of anecdotal evidence of people recently looking to fix longer.
A decisive shift towards longer fixed terms would suggest borrowers are less focused on chasing further rate cuts and more concerned with locking in certainty. That kind of move can steady household budgets and, in turn, underpin a more stable housing market.
What it all means for house prices in 2026
Taken together, the data and trends point to a housing market that is past its sharp downturn but not yet in full recovery mode.
In 2025, national values slipped slightly, Christchurch and Tauranga managed gains, and Auckland and Wellington saw further declines. Now, the combination of:
- A likely improvement in economic growth
- Early signs of rising employment
- A tentative recovery in building activity
- Slowing inflation and a more watchful Reserve Bank
- And a potential shift in how borrowers fix their mortgage terms
All suggest 2026 is more likely to be a year of rebuilding confidence than a return to boom-time conditions.
For buyers, that could mean more choice in previously overheated markets that have corrected, and less upward pressure on rents. For sellers and investors, the message is patience: the steep falls appear to be behind us, but the next phase looks like a slow, steady grind higher rather than a rapid rebound.
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