Falling four-bedroom prices, record first-home buyer activity and livelier auctions: is the housing market quietly approaching a turning point? A round-up of recent developments buyers should watch

Over the past few years, New Zealand’s property market has undergone a deep correction after its peak, forcing many families to put their dreams of a larger home on hold. Recently, however, a series of indicators has been sending subtly positive signals: four-bedroom house prices are quietly falling, lending activity continues to pick up, first-home buyers are entering in record numbers, and auction sales are recovering. Together, these developments paint a picture of a housing market stabilising at the bottom.

1 Is upgrading to four bedrooms getting easier? Auckland’s price gap narrows by 30,000

According to Cotality’s latest research, the premium for upgrading from a three-bedroom to a four-bedroom home has fallen nationwide. In Auckland City in particular, the gap has narrowed by more than NZ$32,000 from its high a year ago and now stands at NZ$601,000. Although still substantial, this is a rare decline in recent years.

In Manukau, North Shore and Rodney, the gap remains above NZ$300,000, but is also narrowing. In Dunedin and Upper Hutt, it has even fallen below NZ$200,000. Franklin is the only area bucking the trend, as local four-bedroom prices have fallen less than three-bedroom prices.

Cotality chief economist Kelvin Davidson says: ‘With plentiful listings and falling borrowing costs, upgrading is becoming more feasible.’ Although most upgraders need to sell before buying and conditional transactions face obstacles, buyers seeking a better home may gradually return over the coming months after several quiet years.

 

2 Banks remain busy as refinancing and mortgage top-ups keep activity high

 

Data shows that newly approved mortgages nationwide totalled NZ$8,600,000,000 in May 2025, up NZ$1,700,000,000 on the same month last year. This was the sixth time in the past 8 months that the annual increase exceeded NZ$1,000,000,000.

Notably, the number of mortgage refinancing customers reached a record 3200. A high proportion of short-term loans gives buyers greater flexibility to quickly find better rates at another bank without incurring large break fees. Meanwhile, mortgage top-up activity has also

risen slightly, suggesting that some homeowners are using their home equity to fund living costs or investments.

 

 3 First-home buyers: gaining ground amid stable prices

 

While most attention is focused on buyers upgrading their homes, first-home buyers are quietly shaping changes in the market in another way.

Interest.co.nz estimates that first-home buyers paid an average of NZ$673,000 in May 2025, slightly below April and broadly unchanged since October last year. This remains NZ$45,000 below the April 2022 peak, a decline of 6.3%.

More notably, 41.9% of first-home buyer loans were low-deposit loans, with deposits below 20%, a record share representing 1213 loans. Both the proportion and the number were the highest since the Reserve Bank of New Zealand began collecting this data in 2014.

A total of 2895 first-home buyer loans were approved in May, accounting for a full third of all home purchase loans that month and demonstrating the significant role first-home buyers now play. This suggests that young families’ confidence in entering the market is recovering rapidly as interest rates gradually ease and house prices hold steady.

 

4 The economy and employment remain fragile, but market expectations are beginning to shift

 

Although GDP grew 0.8% in the first quarter of 2025, more timely data shows that economic momentum remains weak. ANZ’s consumer confidence index remained subdued in June, while the New Zealand Activity Index (NZAI) rose just 0.5% year on year in May, an 8-month low.

The labour market is also lacking strength. Filled jobs data for May is expected to remain weak, putting some restraint on homebuying confidence. Kelvin Davidson notes:

‘Our economy remains in a fragile balance, and a strong recovery has yet to truly begin.’ This is a key reason house prices have not rebounded broadly despite falling interest rates.

 

 5 Positive auction signals: sale prices return to or exceed rating valuations

 

Although the economy has not fully recovered, the property market is already responding. From 21 June to 27, Interest.co.nz monitored 262 auctions, with 103 properties selling. The sale rate reached 39%, up from 35% the previous week.

More notably, 56% of Auckland sales were at or above the latest rating valuation (RV), the highest proportion since 2023. This was particularly evident in North Shore, Waitākere and the central leafy suburbs—the traditionally affluent areas around central Auckland, such as Remuera, known for greenery, wide streets, pleasant surroundings and expensive homes.

Auckland Council recently updated its RVs, lowering them by around 9% on average. Even so, buyers have become more willing to pay for quality properties, suggesting market expectations are shifting from waiting for further declines to viewing current prices as reasonable.

 

6 Construction’s spring recovery may still take time

 

Building consent numbers have recently stabilised after a series of declines. New residential consent data for May is expected to remain steady. As mortgage rates continue to fall, construction activity could recover modestly over the next one to two years, though a surge in growth is not assured.

Whether you are a first-home buyer waiting on the sidelines or a family considering an upgrade, your assessment of the current market is worth sharing. Have you also noticed changes in the housing market? What do you make of falling four-bedroom prices and the recovery in mortgage activity?

Leave a comment below to share your views and plans, and join the discussion about where New Zealand’s housing market is heading next.