NZ Housing: North & South Island Markets Diverge – Prices & Outlook

New Zealand’s housing market is increasingly divided, with prices in the South Island rising to record levels whereas those in Auckland and Wellington continue to fall, according to data released Monday by the Real Estate Institute of New Zealand (REINZ).

The national median house price rose 0.4 percent in January 2025 to $753,106. However, this figure masks significant regional disparities. Excluding Auckland, the national median increased 1.4 percent to $700,000. While Auckland and Wellington prices remain 23.6 percent, and 26.9 percent below their post-Covid peaks respectively, the West Coast saw a record high of $480,000, a 9.3 percent increase year-on-year.

Southland’s prices were up 5.7 percent year-on-year, Otago’s 6.7 percent, and Canterbury 3.4 percent. Nelson was the only South Island region to experience a decline, falling 8.9 percent.

In contrast, the North Island’s gains were limited. Only Waikato, Hawkes Bay, and Auckland saw median sales price increases compared to the previous year – 1.4 percent, 2.4 percent, and 1.1 percent respectively.

Looking at five-year trends, Auckland prices are down 1 percent annually, and Wellington is down 3 percent. Christchurch, however, has seen a 5.4 percent annual increase, Queenstown 8.1 percent, and Invercargill 5.2 percent. Otago and Southland are also at record price levels.

BNZ chief economist Mike Jones described the situation as a “tale of two islands,” stating that it was becoming “more and more difficult to even talk about the New Zealand housing market as an entity, because it is so divergent amongst those regions.” He noted a slow internal migration shift southward, coupled with income boosts from commodity prices in rural and regional areas.

“Also you’ve got the affordability dynamic as well, which is that all of these markets, whether it’s in the South Island particularly, are cheaper relative to incomes and rents than the likes of Auckland and Wellington,” Jones said.

Jones indicated that the divergence was not expected to narrow soon, citing continued migration patterns and relatively stronger regional economies. He highlighted the significant price movements since the market correction ended in April 2023. “In the 33 months since, house prices have declined an additional 1.4 percent in Auckland and an additional 3.2 percent in Wellington. At the same time, in Canterbury, Otago and Southland, they’ve gone up 17 percent and 20 percent.”

Increased housing supply in Auckland was also cited as a factor. “If you look at listings per region, certainly Auckland and Wellington stand out as being more oversupplied,” Jones said, adding that construction activity was beginning to pick up despite low population growth.

Property investment coach Steve Goodey reported a lack of investment yield in Auckland. “I’m advising clients not to head there for cash flow if that’s what they are after,” he said, noting discounts were available but not sufficient to generate cash flow. He has recently invested in Invercargill, Whanganui, and Hawera.

Cotality chief property economist Kelvin Davidson’s data showed sales activity increasing fastest outside of the main centers. He anticipates Auckland and Wellington may lag behind the national average house price rise of 5 percent projected for this year. “I could see that lasting for a while just reflecting the shape of the economy at the moment.”