All eyes were on the Reserve Bank of New Zealand’s much-awaited November 2025 Monetary Policy Statement, which heralded a drop in the Official Cash Rate to 2.25%, its lowest point in 15 months.
Some commentators have suggested that another cut may possibly come in February. However, others believe that those chances are low, and the Reserve Bank itself has appeared to signal the same message.
With annual inflation edging up to 3.1% in the December 2025 quarter (slightly above the Reserve Bank’s 1–3% target band), and labour market signals mixed, experts have expressed cautious optimism that the economy may be approaching a turning point, though any sustained recovery will remain data-dependent
Lockdown effect
The country’s current property market - with its broadly flat prices, still reflects the lingering effects of Covid-19. The pandemic’s sudden arrival in 2020 brought strict containment measures that closed borders and placed the country in extended lockdowns. These actions, taken to prevent the health system from being overwhelmed were supported by stimulus measures – including lower interest rates, which initially helped New Zealand side-step many of Covid’s negative effects on the economy.
However, a subsequent burst in residential property market activity in 2021 and 2022 was both unexpected and unprecedented.
Boom times, then back down to earth
Agents described frenzied multiple offer situations and jaw-dropping auction room scenes – particularly in Auckland, as prices soared, motivated in large part by FOMO – or fear of missing out, due to a general shortage of quality stock to meet high demand at the time.
Naturally, in the face of this dramatic comeback, affordability plummeted, forcing the Reserve Bank to step in again, this time raising interest rates to put the brakes on and try and restore balance to the market.
Finally, the spectacular upwards trajectory reversed course and house prices in Auckland tumbled dramatically, following a stunning November 2021 peak of $1,300,000. They have remained subdued since then, with Auckland’s median sale price at $1,015,000 in December 2025 (down from $1,050,000 in November 2025), according to the Real Estate Institute of New Zealand.
"November marked only the sixth time in 33 years that New Zealand's November sales count was below October's, underscoring how unusual it is for activity to ease at this point in the seasonal cycle. Despite the slower sales pace, median prices have remained largely resilient, supported by a stable underlying demand," she said.
Inevitable fallout, but better days ahead
Unfortunately, many who bought during that brief, intense – almost surreal post-pandemic period are now selling at a loss in what is unarguably a buyer’s market, with their only other option being to stay put and potentially wait years to see their property’s value match what they paid for it.
Falling rates and stable, lower inflation tend to first work to absorb existing inventory the good news is that The Reserve Bank and most other experts are pointing towards modest growth of around 4% over the next year or so.
While vendors with realistic expectations are contributing to a steady supply of properties for sale, migration is trending up as disillusioned Kiwis seek better lives overseas – taking their wealth with them. In contrast, the current cohort of new arrivals tends to have less money to spend, which is contributing to changing market dynamics in terms of both buying and renting.
Have we finally turned the corner?
Opteon Registered Valuer Mark Davidson confirms that long awaited green shoots are appearing in the residential market, at least.
“With interest rates falling it definitely feels like a positive in that space, and we’ve had a couple of good sales in my street over the past few months, which is a promising sign.”
He adds that debt to income ratio limits currently in place mean another major boom is unlikely for a while.
“And the pressure is really on landlords at the moment with the rising costs of rates and insurance forcing many of them to top up out of their own money.”
In addition, he says demand from renters is relatively low, partly due to the large number of developers who were active in the market during the 2021 and 2022 peak.
“They were buying homes with large sections and putting a number of newbuilds on them – often in places where people don’t really want to live, so there is a bit of an over-supply at the moment.
“For many smaller property investors this combination of circumstances makes their investment unsustainable, with negative cashflow, so they’re selling up.”
Commercial break
Davidson also signals that an already obvious commercial trend - the demise of the high street, continued to gather speed during the Covid years and that this downward movement has continued.
“With online shopping and working from home there’s more need for logistics space and less for shopfronts,” he says.
“We tend to look at Takapuna and Newmarket as bell weather suburbs. Before Covid they were both key retail hubs but now - outside of the malls, they are on their knees. You can barely see anybody on Hurstmere Road at lunchtime during the week, although I gather weekends are a bit better.”
A finger on the pulse
Opteon Director of Operations Paul McCorry says that as valuers the team sees multiple transactions every year and are constantly analysing market trends.
“It’s good to see interest rates falling but the dynamics this time are quite different,” he says.
“Some people won’t come off fixed rates until later in 2026 so they’re not feeling wealthier yet and with the high cost of living and more unemployment, New Zealanders are nervous when it comes to making decisions. This means that getting good advice is more critical than ever.”
He too is seeing a softening in the market for retail premises.
“In terms of retail, we’ll need to find other ways to rethink our city centres because shopping as we knew it won’t be coming back to what it was before.”
Around the country
McCorry says that regions are responding to current pressures in different ways, pointing out that the Christchurch rebuild has completely revitalised the city and its surrounds while Queenstown, the darling of the tourism industry, continues to roar ahead, seemingly untouched by uncertainty affecting markets elsewhere.
It’s interesting to note that first home buyers in the alpine resort and its surrounding communities are at their most active in almost 20 years.
Invercargill is another place where transformation in retail via modern innovations is bringing rewards.
“They’ve put a lot of money into their CBD and significantly raised commercial confidence,” says McCorry.
Where to from here?
Mark Davidson says at the moment he generally suggests that clients consider putting their funds into modern industrial buildings which are the current hot ticket, and potentially the most likely to see a further uptick in demand as lower interest rates encourage business owners to invest.
“In times like these you tend to see a flight to quality.”
He says that in today’s commercial market demand is broad across the major asset classes: retail, office, warehouse and industrial.
Tenant demand and increasing fit-out costs are clearly influencing property values, making it vital for buyers and investors to stay in step with current valuation trends.
2025’s budget saw the introduction of a 20% tax deduction on the value of new commercial and industrial buildings which is also making the sector look more appealing.
Ask the experts
Opteon valuers provide candid assessments, using cutting-edge technology to ensure that potential buyers understand the true market realities of residential and commercial property purchases.
Precise valuations are essential, as banks depend on them to determine borrowing limits for investors looking to refinance, leverage additional funds, or expand their portfolios without dipping into their savings.
Davidson says that he encourages New Zealanders to explore the many interesting possibilities on offer at the moment, especially if they are cashed up and able to do so without undue risk. He believes that prices are about as low as they’re going to go in this particular economic cycle.
“If you’re thinking of making a move in this space, my advice is to do it now!”
Paul McCorry agrees.
“When everybody makes an effort to think positively, you can generate confidence and find a way out of a downturn,” he says.
However, he adds that the assumption that property prices will double every ten years will probably prove untrue in future, so investors need to ensure that their portfolios are resilient.
Also in the mix of important considerations is the prospect of a capital gains tax if Labour is returned to power in the 2026 General Election.
“Having said that, of course people will always need places to live and work.”
With New Zealand economic experts predicting a much brighter 2026, valuers are busy again providing quality guidance and accurate data to Kiwis eager to make their savings work harder through good decisions around property ownership.
Buyers are focusing on affordable price levels and building well-planned portfolios, this time without the frenzied backdrop of 2021 and 2022.
