Market recovery signals consistent with interest rate falls

The early stages of a property recovery could have appeared in the past two months, Kelvin Davidson, Cotality chief property economist says.

Monday, November 3rd 2025, 11:56AM

by Sally Lindsay

“It’s a cliché, but upturns obviously have to start somewhere, and the recent emergence of small increases in property values would certainly be consistent with the falls in mortgage rates over the past year or so.”

Figures from Cotality’s hedonic Home Value Index (HVI) show the national median value now sits at $811,662.

Across the main centres, apart from Auckland, house prices lifted by 0.2% last month, the second modest rise in a row, after five consecutive falls over April to August.

Auckland prices fell 0.2%, Hamilton was flat, Tauranga and Wellington both lifted 0.2%, while Christchurch rose 0.4% and Dunedin 0.7%.

Davidson says the second consecutive lift in property values could signal the early stages of a market recovery.

“That being said, sentiment remains tilted to the cautious end of the spectrum, and the economy and labour market are still subdued. Meanwhile, the gains in September and October are clearly reasonably small in the grand scheme of things.”

He pointed out that one notable shift in credit policy in recent weeks has been the announcement the loan to value ratio rules are set to ease from 1 December.

“That may possibly benefit investors a bit more than owner-occupiers, although the potential scope for more preapprovals for low equity loans could bolster first home buyers.”

“We’ve seen in the past that banks tend to act early on these rule changes, so the effects may start to show through even as soon as the release of October’s mortgage lending stats in late November.”

Davidson says meanwhile, it’s still early days for Labour’s capital gains tax policy, given it won’t mean much if it doesn’t get into power.

“One lesson from other countries is that CGT doesn’t stop house price growth, although this policy proposal does add to the general sense that property returns in future could be a touch less than in the past.”

Auckland, down but not out
Auckland’s various sub-markets remained patchy last month, with Franklin rising by 0.3% and North Shore edging slightly higher. However, Rodney, Manukau, and Papakura all ticked down by 0.1%, with bigger drops in Auckland City and Waitakere.

Over the past 12 months, the super-city has seen a 2% drop in values, reflecting weakness in North Shore, Auckland City, and Manukau – which combined account for almost 70% of all residential properties.

Compared to the previous peak, the falls across Auckland continue to range from about 20% down to -25%.

“The stock of available listings across the super-city has eased this year, potentially lessening buyers’ pricing power to a degree.

But the new-build pipeline remains active.

Independent economist Tony Alexander and Crockers’ latest survey of property investors shows a definite move away from those wanting to buy an existing property compared to a new build.
The number of investors who want to buy an existing property dropped from 76% in September to 62% in October.

Alexander says this feels like a statistical aberration, but this retreat is seen in an even spread of gains for buying a new-build or investors doing their own development.

“This suggests while caution in interpretation is required, it may be one of the early signs we expect to see emerge in response to falling interest rates driving a rise in residential construction around the country.”

Falls from market peak remain significant for Wellington

It was also a mixed bag for the wider Wellington area last month, with Lower Hutt seeing property values fall by 0.4%, and Porirua down by 0.2%.

However, the other sub-markets were either flat or higher, with Wellington City itself seeing a 0.5% increase.

Davidson says the falls from the market peak remain significant across the region, ranging from about -23% in Kāpiti Coast and Porirua, to -26% in Lower Hutt.

“Wellington is another area where the stock of available listings has drifted lower this year. But the market remains in favour of buyers, with plenty of choice.

The subdued state of the Wellington economy and muted confidence both remain a factor in its sluggish housing market. That said, the hints of growth in Wellington City could be something to watch in the next few months.”

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