New Zealand Housing Market Diverges Between North and South Islands

New Zealand’s housing market is experiencing a notable divergence, with sharp contrasts between the North and South Islands. According to the latest data from the Real Estate Institute, national median house prices increased by 0.4 percent from January to November 2025, reaching a median of $753,106. Excluding Auckland, the increase was slightly higher at 1.4 percent, bringing the median price to $700,000.

In stark contrast, Auckland and Wellington have seen significant declines since their post-COVID peaks, with prices dropping by 23.6 percent and 26.9 percent, respectively. Meanwhile, the South Island’s West Coast hit a record high of $480,000, marking a year-on-year increase of 9.3 percent. This trend is echoed in other regions, with Southland prices rising by 5.7 percent, Otago by 6.7 percent, and Canterbury by 3.4 percent. The only exception was Nelson, which experienced a decrease of 8.9 percent.

Regional Variations Highlighted

In the North Island, only a few areas, including Waikato, Hawkes Bay, and Auckland, reported increases in median sales prices for January compared to the previous year. The increases were modest, at 1.4 percent, 2.4 percent, and 1.1 percent, respectively. Data from the house price index reveals declines in Auckland and Wellington over a five-year period, with Auckland prices down 1 percent annually and Wellington down 3 percent. In contrast, Christchurch’s prices increased by 5.4 percent, Queenstown’s by 8.1 percent, and Invercargill’s by 5.2 percent.

Mike Jones, chief economist at BNZ, characterized the situation as a “tale of two islands.” He noted that the North Island market operates at a different pace compared to the South Island. “It’s becoming more and more difficult to even talk about the New Zealand housing market as an entity,” he said, highlighting the growing divide among regions.

Jones pointed to several factors contributing to this divergence. A notable trend is the migration of people towards the South Island, coupled with improved rural and regional incomes due to commodity cash flow. He emphasized that the South Island markets are generally more affordable relative to incomes and rents compared to their Northern counterparts.

Future Trends and Investment Insights

The correction in national house prices, which began in April 2023, has resulted in further declines of 1.4 percent in Auckland and 3.2 percent in Wellington over the past 33 months. In contrast, prices in Canterbury, Otago, and Southland have surged by 17 percent and 20 percent respectively, illustrating the stark contrast in market performance.

Jones noted that Auckland has seen a more aggressive supply response, with increased construction providing buyers with greater choices. “If you look at listings per region, certainly Auckland and Wellington stand out as being more oversupplied,” he stated, adding that construction activity is beginning to pick up again despite low population growth.

Investment coach Steve Goodey advised potential investors to be cautious in Auckland due to a lack of yield. He mentioned that while discounts may be available, the region does not provide the cash flow opportunities investors seek. Goodey has turned his attention to smaller towns, recently investing in areas such as Invercargill, Whanganui, and Hawera. He cautioned that while some areas like Tokoroa are affordable, they lack the potential for price appreciation.

Kelvin Davidson, chief property economist at Cotality, indicated that sales activity outside the major centres is picking up more quickly. He projected a national average increase of 5 percent in house prices for the year, though he suggested that Auckland and Wellington might lag behind this figure, while locations such as Invercargill and Nelson could outperform.

The current trends suggest that the New Zealand housing market will continue to evolve, with divergent paths for the North and South Islands as various economic factors shape regional dynamics.