Housing market reaches potential turning point

New Zealand's housing market delivered its strongest July performance in over a decade, with the national median house price holding steady during what is traditionally one of the year's weakest months.

The median house price decreased just 0.2 per cent to $767,250 in July, a minimal decline from June's $770,000. More significantly, this represents a 1.7 per cent increase from one year ago, and this stands out as exceptional when viewed against historical patterns.

New Zealand's housing market operates within well-established seasonal cycles, characterised by two distinct slow periods. The first occurs during summer holidays from December to January, whilst the second spans April to July, punctuated by school holidays, national public holidays, and shorter winter days. July traditionally marks the tail end of this reduced seasonal activity.

The average June-to-July decline over the past decade has been 1.9 per cent, a seasonal adjustment that persisted even during the consistent growth years of 2015-2019. Excluding the pandemic-driven boom of 2020-2021, this represents the best July result in over a decade.

Over the last six months, sales have been steadily increasing whilst listings have been decreasing, creating a convergence that historically signals the end of buyer-favorable conditions. The 12-month rolling count of sales increased 6.3 per cent to 78,148 from 73,463 in January 2025, whilst the 12-month rolling count of listings decreased by 0.5 per cent to 110,055 from 110,618.

This divergence has driven the sales-to-listings conversion ratio to improve consistently, rising from 66.4 per cent in January to 71.0 per cent in July. This 4.6 percentage point acceleration represents the most sustained market tightening period since the post-pandemic correction began.

This tightening reflects both stronger buyer demand and more selective seller behaviour, creating potential upward pressure on prices. The diverging trajectories of sales acceleration (+6.3 percent) and listings contraction (-0.5 percent) creates a compounding tightening effect that typically precedes sustained price appreciation cycles.

Looking ahead, these tightening fundamentals become particularly significant when viewed against seasonal patterns. If July 2025 can maintain near-flat pricing despite seasonal headwinds that typically drive prices down nearly 2 per cent, the spring months of September through November could deliver substantial growth.

The 1.7 per cent increase in national median house price is reflected across regional and major city performance, revealing distinct market segments driving the recovery. The growth is being led by a clear affordability sweet spot, with middle-market regions priced between $650,000-$800,000 delivering exceptional growth averaging 10.3 per cent annually. Nelson Region leads this cohort with remarkable 15.7 per cent growth, followed by Otago Region's strong 11.1 per cent performance. This middle bracket significantly outperforms both affordable markets under $650,000 (averaging just 0.1 per cent) and expensive markets above $800,000 (averaging 2.6 per cent).

A striking "catch-up" pattern emerges among major cities, where centres that experienced the deepest corrections during 2022-2023 are now leading the recovery. Auckland City (+3.7 per cent) and Wellington City (+2.4 per cent) are demonstrating stronger annual momentum than Hamilton City (+1.4 per cent), whilst Tauranga City (-2.8 per cent) continues to work through its adjustment phase.

Christchurch emerges as the standout performer among major centres, delivering both strong annual growth (+3.2 per cent) and positive three-year performance (+1.4 per cent). This makes it the only major city to have successfully navigated both the pandemic boom and subsequent correction without significant value destruction, positioning it as the most resilient major urban market in the country.