Sales rise, prices stabilise and the Government steps up housing policy. Is Auckland’s property market entering a new phase?

Over the past two years, the phrases heard most often in Auckland’s property market have probably been “watch and wait” and “hold off”.

Buyers have been waiting for interest rates to fall, while sellers have been waiting for prices to recover. Now, with the release of the latest market data and a series of housing growth policies in the Government’s Budget 2026, a new question is emerging:

Could this property cycle be different from those before it?

The latest Barfoot & Thompson market data for May shows Auckland residential sales reached 885, up 28.6% from April. The median sale price recovered to $980,000, while the average reached $1,157,213, with both measures rising.

A single month’s data is not enough to establish a full market recovery, but simultaneous improvements in sales, prices and buyer activity clearly send a positive signal. More significant than house prices themselves is the shift in market sentiment. 

Why are buyers returning to the market?

Barfoot & Thompson managing director Peter Thompson said the market returned in May to the more positive momentum seen earlier in the year. Buyers who had temporarily stepped back in April amid international developments and financial market volatility became active again in May, as the market gradually absorbed external uncertainty.

Meanwhile, the current recovery is not confined to a single buyer group.

The data shows increased sales of properties above $2,000,000, with the upper end of the market remaining active. Homes below $750,000 accounted for around a fifth of all sales, as first-home buyers and budget-conscious buyers also continued to enter the market. This suggests the improvement is being driven by participation across price brackets and buyer groups, rather than by a single segment.

The factors behind this shift are straightforward. Mortgage rates have fallen considerably compared with a year ago. Although they remain above the historic lows seen during the pandemic, lending conditions have improved markedly from the past two years. ASB senior economist Mark Smith has also noted that falling borrowing costs are improving housing affordability, with property sales expected to continue recovering over the coming quarters, although house price growth may remain modest.

Market confidence rarely returns overnight. But as more buyers resume viewing homes, applying for loans and making active offers, sales volumes usually reflect the change first.

Budget 2026 sends a long-term signal

Alongside the improving market data, a housing policy proposed in Budget 2026 has also attracted industry attention.

The Government announced it would invest NZ$400,000,000 over the next four years to establish the Incentives for Growth Fund, encouraging councils to support more housing development alongside roads, water supply, drainage and other infrastructure.

For many years, councils supporting housing growth have had to meet infrastructure costs upfront, while the associated revenue takes much longer to materialise. This has been an important factor behind slower housing supply growth in some areas.

The new incentive fund aims to address this mismatch between costs and returns.

However, this policy represents a direction for long-term reform rather than a short-term market stimulus. Under the Government’s plans, funding is expected to begin in 2027, so it will not directly affect this year’s housing supply or immediately alter current market conditions.

For the market, its main message is a policy signal: the Government wants better systems to provide ongoing support for housing construction and infrastructure investment.

Could this property cycle be different?

In most previous property recoveries, demand rebounded rapidly first, while housing supply took several years to catch up, ultimately driving sharp increases in house prices.

This time, the market may be following a different path.

On one hand, falling mortgage rates, improving buyer confidence and rising sales suggest housing demand is gradually recovering. On the other, the Government is simultaneously advancing housing growth policies, planning reform and infrastructure investment to create better conditions for future supply.

Although these policies will not immediately add homes to the market, their gradual implementation over the coming years could allow this property cycle to develop in a more balanced way, with supply capacity improving alongside recovering demand.

Westpac economists have also recently noted that the housing market is expected to continue improving as interest rate conditions ease. However, relatively ample stock and ongoing policies to support future supply make a modest recovery more likely than the rapid price rises seen in previous cycles.

What does this mean for buyers and sellers?

Buyers preparing to enter the market still have a relatively wide choice. Although sales are increasing, overall stock remains relatively high, leaving buyers with some negotiating power. If market activity continues to improve, the current phase may still offer a relatively favourable window to buy.

For sellers, improving market confidence is also bringing positive changes. As sales recover and more buyers return, the chances of selling a property are gradually improving. However, with stock still relatively plentiful, realistic pricing remains an important factor in achieving a sale.

The market is moving towards a more balanced phase

Although challenges remain, Auckland’s property market is showing an increasing number of positive signs.

Continued improvements in sales, gradually easing lending conditions, recovering buyer confidence and the Government’s ongoing housing growth policies all suggest Auckland’s property market is entering a new phase.

Whether the market can sustain this trend over the coming months will depend on interest rate movements, economic conditions and further changes in buyer and seller confidence. What is clear, however, is that Auckland’s property market is undergoing a more measured, more balanced adjustment, potentially making it one of the most notable market developments of 2026.

Founded in 1923, Barfoot & Thompson now has a century of history. We have 85 branches and more than 1800 salespeople across Auckland, Northland and the Bay of Plenty. Our services cover residential and commercial property, farms and lifestyle properties, property and body corporate management, and major projects. Our distinctive, company-owned, non-franchised structure allows every salesperson to access listings across the entire company, substantially increasing property exposure and competition among buyers.