House prices edge up, sales recover and foreign capital returns: what do these three positive signals mean for New Zealand’s property market?

After more than two years of market adjustment, New Zealand’s property market is gradually showing some positive signs worth watching. The latest data shows national house prices beginning to edge up, sales activity gradually recovering and overseas capital becoming active again in the luxury housing market.

Together, these three sets of data from different parts of the market paint a picture of gradual change: the property market may be moving out of its earlier downturn towards a more stable and balanced state.

However, several industry figures caution that the market is still at an early stage and more data is needed to confirm its future direction.

House prices edge up: is the market starting to bottom out?

The latest Home Value Index released by property data provider Cotality shows the national median house price rose 0.2% month on month in February this year to $806,697. This was the strongest monthly increase since October last year.

National house prices had previously slipped 0.1% in January, with prices largely flat over recent months. Although the increase in February was modest, all major cities recorded price growth to varying degrees, suggesting a subtle shift in market sentiment.

Over a longer timeframe, however, house prices remain in an adjustment phase. The national median house price is still 17.3% below the market peak of $975,540 in early 2022, and is down 1.2% year on year.

Kelvin Davidson says the increase in February may point to modest house price growth over the coming months, but it is too early to conclude that the market has entered a new growth cycle.

He notes that property sales volumes have been gradually recovering, mortgage rates have fallen and the economy has shown some signs of recovery. Against this backdrop, modest house price growth this year would be unsurprising.

However, he also stresses that at least two to three consecutive months of price growth would be needed to confirm a change in the trend.

Sales recover: lower prices draw buyers back

While house price data offers only an initial signal, the change in sales activity is more pronounced.

Data from Auckland’s largest real estate agency, Barfoot & Thompson, shows it sold 785 homes in February this year. Although slightly below the 824 sales in January, this was still its busiest February for sales since 2021.

The company sold 1609 homes in the first two months of this year, up 16% on the same period last year.

Lower prices are helping to attract buyers and drive the recovery in sales.

Auckland house sale prices fell significantly in February. The median dropped from $1,000,000 in January to $904,000, a decline of 9.6%, while the average sale price fell from $1,169,773 to $1,013,976, down 13.3%.

Peter Thompson says a new structural shift is emerging in the market: falling prices are attracting buyers who were previously priced out.

During the years of soaring house prices through the pandemic, many first-home buyers were kept out of the market by high prices. As house prices and mortgage rates fall, this demand is now returning.

Meanwhile, supply remains plentiful. In February this year, the company added 2252 new listings, up 8.6% year on year, taking its total stock to 6159 properties, the highest level for this time of year since 2010.

For homebuyers, this means there is still plenty of choice. High stock levels and relatively stable prices also give buyers greater negotiating power.

Foreign capital returns: the luxury market warms up first

While the mainstream housing market is recovering slowly, changes in the luxury property market are more pronounced.

An important factor is a limited change to New Zealand’s rules on overseas investors buying homes. Under amendments to the Overseas Investment Act, from 6 March 2026, overseas investors holding an Active Investor Plus (AIP) visa will be allowed to buy or build one home valued at NZ$5,000,000 or more, subject to approval from the Overseas Investment Office (OIO).

However, this does not mean New Zealand has reopened its housing market to foreign buyers. Since the foreign buyer ban took effect in 2018, most non-resident overseas buyers have remained unable to purchase New Zealand homes. This policy adjustment is only a limited exception intended to attract high-net-worth investors.

Against this backdrop, some high-net-worth international buyers are taking a renewed interest in New Zealand property, particularly the South Island’s luxury holiday home market.

Luxury real estate agency New Zealand Sotheby’s International Realty says overseas buyer numbers have increased noticeably recently, particularly in Southern Lakes locations such as Queenstown, Arrowtown and Wānaka.

Mark Harris says viewings in the Queenstown market have increased noticeably over recent weeks, with many high-net-worth buyers flying in to inspect properties in person. “Last week, the Queenstown office completed 14 sales, including one above $10 million and another above $7 million.”

Data shows sales of properties above $5 million nationally increased 55.6% year on year, with Southern Lakes accounting for nearly 80% of transactions.

Overseas buyer participation is also increasing. From January to February this year, overseas buyers accounted for 13% of buyers in Southern Lakes, compared with just 6.5% in the same period last year. Buyers from the United States, Australia, Germany, Switzerland, Hong Kong, China, Japan and mainland China are reappearing in New Zealand’s luxury property market.

The market changes behind the three signals

Viewed together, house price trends, sales activity and changes in the luxury sector reveal a more complex market picture.

First, house prices appear to be gradually approaching a floor. Although gains are limited, an end to persistent price declines often suggests the most severe phase of the market adjustment may be over.

Second, sales activity is recovering. As house prices and mortgage rates fall, some buyers who previously waited on the sidelines are returning to the market.

Meanwhile, the luxury property market appears to be warming up first. Policy changes and global capital flows are prompting some high-net-worth overseas buyers to take a renewed interest in New Zealand property.

Together, these changes point to a potentially emerging trend: the property market is gradually moving from a single cycle towards a pattern in which different market segments move at different speeds.

Commentary and reflection

If New Zealand’s property market underwent a broad adjustment over the past few years, it now appears to be entering a new phase.

The mainstream housing market is gradually recovering and sales activity is picking up, but stock levels remain high and upward pressure on house prices remains relatively modest. Meanwhile, policy adjustments and renewed global capital flows have already begun to lift activity in the luxury housing market.

Over the coming years, New Zealand’s property market may increasingly comprise several “submarkets” moving at different speeds, with the mainstream housing market recovering steadily while the luxury property market is more heavily influenced by international capital.

What do these three signals mean to you? Has New Zealand’s property market already bottomed out? And what changes will the return of foreign capital bring?