Cautious buyers return as market steadies on rate cuts
Property values rose modestly across New Zealand for the second month in a row, signalling what could be the early stages of a market recovery, according to Cotality NZ chief property economist Kelvin Davidson (pictured).
Across the main centres, Auckland fell slightly (-0.2%), while Hamilton was flat. Tauranga and Wellington both lifted 0.2%, with Ōtautahi Christchurch up 0.4% and Dunedin rising 0.7%.
Davidson said the back-to-back increases suggest the cycle may be turning – though caution remains warranted.
“It’s a cliché, but upturns obviously have to start somewhere, and the recent emergence of small increases in property values would certainly be consistent with the falls in mortgage rates over the past year or so,” he said.
“That being said, sentiment remains tilted to the cautious end of the spectrum, and of course, the economy and labour market are still subdued. Meanwhile, the gains in September and October were clearly reasonably small in the grand scheme of things.”
Rate cuts, lending lift, and easing rules boost confidence
Davidson noted that the loan-to-value ratio (LVR) rules are set to ease from Dec. 1, a shift that could support both investors and first-home buyers.
“That may possibly benefit investors a bit more than owner-occupiers, although the potential scope for more pre-approvals for low-equity loans could bolster first-home buyers,” he said.
He added that lenders often move ahead of formal changes.
“We’ve seen in the past that banks tend to act early on these rule changes, so the effects may start to show through even as soon as the release of October’s mortgage lending stats in late November.”
Meanwhile, lending activity was already gathering pace ahead of the change. The Reserve Bank’s latest data shows total mortgage lending rose to $8.18 billion in September — the strongest monthly total since early 2022. First-home buyers and investors both increased borrowing, reflecting renewed confidence as rates fall.
Most new loans remained within 80% LVR limits, showing that both banks and borrowers are taking a more disciplined approach than in previous booms. This cautious momentum suggests a market that’s strengthening steadily rather than overheating.
Mixed results across main centres
In Auckland, performance remained patchy in October. Franklin rose 0.3%, and the North Shore edged higher, but Rodney, Manukau, and Papakura all slipped -0.1%, with larger drops in Auckland City and Waitākere.
Over the past 12 months, Auckland values have declined 2%, with the biggest weakness concentrated in North Shore, Auckland City, and Manukau – which together account for nearly 70% of dwellings in the super-city.
“The stock of available listings across the super-city has eased downwards this year, potentially lessening buyers’ pricing power to a degree,” Davidson said.
“But the new-build pipeline remains active, and several economic sentiment indicators for Tāmaki Makaurau Auckland are still subdued, and this cautious mood is clearly pervading the property market too.”
In Wellington, Lower Hutt fell -0.4% and Porirua -0.2%, while Wellington City rose 0.5%. Falls from the peak remain significant – down 23-26% across the wider region.
“Te Whanganui-a-Tara Wellington is another area where the stock of available listings has drifted lower this year,” Davidson said.
“But the market still remains in favour of buyers, with plenty of choice out there. The subdued state of the Wellington economy and muted confidence both remain a factor in its sluggish housing market too. That said, the hints of growth in Wellington City could be something to watch in the next few months.”
Provincial markets show early strength
Provincial areas largely mirrored the improving tone. Nelson, Queenstown, and Invercargill each rose by more than 1%, while Rotorua gained 0.6%. Modest declines were recorded in Palmerston North, New Plymouth, and Whangārei.
“In the current environment where a range of confidence measures in relation to the economy or property market are still fairly subdued, it’s no real surprise that value patterns remain a bit patchy from month to month and region to region,” Davidson said.
“However, the improvement in rural business returns in recent times has still generally been supportive for property, nowhere more so than a market like Waihōpai Invercargill – where values are now at a new peak.”
Outlook: modest recovery expected in 2026
Davidson said attention will now turn to the Reserve Bank’s 26 November OCR decision, widely expected to bring another 25-basis-point rate cut.
“There’ll obviously be a lot of focus on the Reserve Bank’s final OCR decision for the year, which at this stage looks likely to be a 0.25% drop. This, however, could mark the end of the cuts in this cycle,” he said.
Davidson expects housing activity and prices to lift moderately in 2026.
“With mortgage rates already having fallen a long way, housing affordability more favourable, listings down a bit, and the economy set to improve, 2026 looks likely to see a rise in both property sales activity and house prices,” Davidson said.
But Davidson said any gains would likely remain contained.
“Would-be buyers may not necessarily need to be too concerned about falling behind," he said. "After all, with the stock of housing having risen in recent years relative to population, and debt-to-income ratio caps also now in action, only a modest rise in prices of perhaps 5% or less seems more likely than a fresh boom.”
Davidson added that affordability remains attractive for those able to act.
“Prospective buyers, whether that’s owner-occupiers or investors, will also no doubt be pleased that values remain around 17% below their early 2022 peak – with some likely to be viewing this as a strong opportunity to snap up ‘bargains’ at what might prove to be the low point for the market,” he said.
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