Property prices fall again in 2025 as market pulled in different directions
The national property market ended 2025 slightly weaker, despite periods of optimism earlier in the year. According to Cotality, national property values fell 1.0% over the year, leaving the median price at $808,430. That figure is now 17.6% below the market peak reached in early 2022.
While values recorded some gains at the start of 2025, momentum did not hold. Prices declined in seven of the final nine months, highlighting the stop-start nature of the market. Regional outcomes were mixed. Auckland values fell 2.6%, Wellington dropped 2.0% and Hamilton declined 1.2%. In contrast, Tauranga recorded a modest 1.0% rise and Christchurch values increased by 2.6%.
Conflicting forces shape the market
Cotality Chief Property Economist Kelvin Davidson said 2025 was defined by competing pressures. “It’s been a year of conflicting forces, with multiple factors pulling in opposite directions to leave values broadly flat,” he said.
Lower mortgage rates provided some upward momentum, but that support was countered by a large number of properties available for sale and a weak economic backdrop. Mr Davidson said the labour market was the biggest challenge, with higher unemployment levels having an indirect effect on consumer confidence.
He also pointed to longer-term supply trends helping to keep prices in check. Growth in the number of dwellings relative to population has put downward pressure on price growth. “The Government’s recent proposal to make major changes to resource management rules – if they get to legislation and stick through the political cycle – will only tend to reinforce these encouraging supply shifts in the housing market,” he said.
What 2026 may bring
Mr Davidson said the price stagnation over the past couple of years had been frustrating for some, but beneficial for those who wanted to enter the market, particularly first home buyers.
He said debt-backed multiple property owners, including “mum-and-dad investors”, had also been returning, helped by lower mortgage rates and the full return of interest deductibility.
Looking ahead, Mr Davidson said 2026 could mark a turning point. “Property values look likely to start rising again – perhaps by 5% – driven by lower mortgage rates and, importantly, a recovering economy,” he said. However, regulation, interest rate decisions and mortgage strategy choices will remain key factors in an election year.
Wondering how current market conditions or a potential turnaround in 2026 might affect your plans? Contact us to talk through your mortgage options and next steps.