Cotality's May data shows a flat market with no clear direction in sight
New Zealand's housing market ended May in the same holding pattern that has defined much of 2026, with the national median value of $808,187 flat on the previous month, down 0.6% year-on-year, and still 17% below the early 2022 peak of $974,002 — according to Cotality's latest Home Value Index.
Cotality NZ chief property economist Kelvin Davidson (pictured) described the result as a continuation of the year's sluggish tone.
"Property values are generally stuck in neutral at the national level, with buyers in no major rush, but sellers not having to capitulate either," Davidson said. "It all adds up to significant headwinds for sales activity and property values in the coming months."
A patchy picture across the regions
The headline flat figure masks significant variation beneath the surface. Auckland slipped 0.2% in May and Wellington fell 0.3%, with both cities remaining subdued. Christchurch rose 0.4%, Dunedin and Tauranga each edged up 0.2%, while provincial markets showed more resilience — Rotorua gained 0.6%, Whanganui 0.8%, and Queenstown, Gisborne, and Invercargill all recorded modest gains.
Davidson acknowledged the divergence but cautioned against reading too much strength into any one market.
"There are differing patterns beneath the surface. Key areas, including Auckland and Wellington are still subdued, while even 'strong' markets such as Christchurch or Invercargill aren't racing away," he said.
Within Auckland, Davidson noted the supply pipeline remained a key dynamic: "The supply pipeline of new townhouses across the super-city remains appreciable and this means purchasers are still in the box-seat, whether they're first home buyers, or even investors looking to expand their portfolio."
Manukau (-24.5%) and Waitakere (-24.9%) have recorded the deepest falls from peak across the super-city's sub-markets.
On Wellington, Davidson pointed to supply and the public sector as structural drags.
"An increase in physical property supply in some parts of the wider Wellington area will have played a role in the weakness of values in recent years,” he said. “But it seems that the far bigger factors will have been the previous boom and sharp reduction in affordability, which created the scope for subsequent large falls in property values, and then just the underlying weakness of the area's economy – as the public sector now faces even more cuts."
Lower Hutt, at 27.3% below peak, has recorded the largest fall of any territorial authority in the country.
That opportunity for some buyers comes against a backdrop of increasing pressure on the market overall.
Rate rises and the OCR outlook
"Interest rates have already lifted in recent months and there's likely to be more to come the longer the Iran conflict continues. At the same time, consumer and business confidence has been hit hard, and there are other signs of economic weakness coming through, such as falls in retail spending," Davidson said.
The Cotality NZ chief economist framed the RBNZ's dilemma plainly.
"The longer the OCR stays on hold the greater the chances inflation is harder to rein back in again – which will tend to put more upwards pressure on mortgage rates,” he said. “But the quicker they move, the higher are the chances of a marked weakening in the economy, with associated knocks to household confidence, the labour market, and also property sales and house prices."
Davidson added that the housing market may find itself caught in the crossfire.
"But in these uncertain times, it may still be caught in the cross-fire – with an OCR rise now looking likely in July – especially as more existing borrowers start to roll off older mortgage terms and onto higher rates," he said.
Davidson’s sales volume forecast has also been revised down.
"Having previously anticipated sales volumes rising from around 90,000 in 2025 to 100,000 this year, the market may actually do well to hold at similar levels to last year. This points to a sluggish outlook for values too," he said.
A silver lining for first-home buyers — and a warning for investors
Despite the headwinds, improved affordability over the past four to five years will tend to limit further downside. First-home buyers with confidence in their own income and financial resilience "should continue to find good opportunities in a market where listings remain elevated," Davidson said — an encouraging signal for brokers working with clients at the entry level of the market.
Investors face a more complex picture.
"This group has other concerns, such as the looming election and scope for capital gains tax if we see a change of government, as well as interest deductibility potentially being phased out again too," Davidson said.
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