Property values were in neutral in May as buyers remain in control
The housing market hit pause in May as a cautious stance from both buyers and sellers kept values flat. The abundance of listings on the market is giving most purchasers the balance of power when it comes to price negotiations, although vendors aren’t having to capitulate either.
Latest value patterns
The national median value in May of $808,187 was unchanged from the previous month and -0.1% lower than three months ago. Values were also -0.6% down from a year ago and still -17.0% below the peak in early 2022 of $974,002.
Across the main centres, Christchurch rose by 0.4% in May, while Dunedin and Tauranga both edged up by 0.2%. Hamilton saw a minor 0.1% rise, but Auckland (-0.2%) and Wellington (-0.3%) both fell a little further again. Around the provinces, many (although not all) markets saw flat or slightly higher results for values in May, with Rotorua (0.6%) and Whanganui (0.8%) recorded stronger increases.
The economic headwinds are still significant
If we think about the underlying economic drivers, the strength of the primary sector (dairy farming in particular) should continue to play a role in provincial property markets, providing some resilience for values in areas such as Southland, Canterbury, and Waikato.
But the overall economy is still showing some cracks, as services sector activity battles along, including subdued performance for retailing. The latest electronic card spending data showed that behaviour is already shifting, with households pulling back on leisure spending as well as reducing fuel purchases too. In other words, wallets are being closed.
The mortgage rate environment is shifting too
Turning to interest rates, although the RBNZ left the OCR unchanged in May, it was a very close-run thing. Barring a big surprise on any incoming economic or inflation data in the next few weeks, all signs now point to the first OCR rise coming through on 8th July, with another possible in early September.
Given that market rates themselves have already lifted, particularly for fixed terms beyond 12 months, this need not dramatically lift mortgage costs in the near term. But the general direction of travel looks fairly clear (upwards), which will obviously be a hurdle for new borrowers as well as existing mortgage holders coming up for renewal.
Anyone repricing a one year loan from one year ago (or six months from six months ago) may still be able to get the same or lower rate right now. But there’s actually been a clear shift out to two-year terms lately, and a move from a six month rate to two years now would see a lift of 0.3%-0.4% – with that repricing increase set to get bigger in the coming months, even if market rates don’t spike.
Challenges and opportunities
Of course, first home buyers who are confident about their financial resilience should continue to find good opportunities in a market where listings remain elevated. To some extent that applies to investors as well. But this group has other concerns, such as the looming election and scope for capital gains tax (and potential loss of interest deductibility too) if we see a change of government.
All in all, housing market conditions remain challenging. 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.
Kelvin Davidson
Cotality NZ Chief Property Economist
June 2026
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