New Zealand's housing market is a "tale of two islands", one economist says - as the fortunes of sellers and house hunters in the South Island rapidly diverge from their northern counterparts.
Real Estate Institute data on Monday added to this picture.
National median prices were up 0.4% between January 2025 and last month to a median $753,106. Excluding Auckland, they were up 1.4% to $700,000.
But while Auckland and Wellington prices are still down 23.6% and 26.9% since their post-Covid peak, the West Coast hit a record high of $480,000, up 9.3% year-on-year
Southland's prices were up 5.7% year-on-year, Otago's 6.7% and Canterbury 3.4%.
Only Nelson was down 8.9%.
But in the North Island, only Waikato, Hawkes Bay and Auckland had a lift in median sales prices in January compared to a year earlier. The increases were 1.4%, 2.4% and 1.1%, respectively.
House price index data shows Auckland prices are down 1% a year over five years, and Wellington is down 3% a year over the same period, but Christchurch is up 5.4% a year, Queenstown 8.1% and Invercargill 5.2%. Otago and Southland prices are also at new records.
BNZ chief economist Mike Jones said it was a "tale of two islands".
"The North Island market, if you put all those parts of the country together, is operating at quite a different pace from the south.
"It's 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 said there was a slow shift south happening as more people migrated within New Zealand.
"Also you've got the commodity cash coming through, which is bolstering some of those rural and regional incomes. That's a story that continues to play out. And then probably the third one is just an 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."
He said he might have expected the difference to start to narrow but there was no sign of that yet.
"I think with those fundamentals still in place, people still moving south, regional economies performing relatively better, we'll probably see a little bit more divergence.
"The correction in national house prices ended in April 2023. In the 33 months since, house prices have declined an additional 1.4% in Auckland and an additional 3.2% in Wellington. At the same time, in Canterbury, Otago and Southland, they've gone up 17% and 20%… So it really shows you how divergent the market has been."
Jones said there had also been a more aggressive supply response in Auckland, with more building giving buyers more choice.
"If you look at listings per region, certainly Auckland and Wellington stand out as being more oversupplied … there are a few signs of that dynamic slowing down.
"We're actually getting construction activity start to pick up again, even as population growth is still pretty low."
Steve Goodey, a property investment coach, said there was "no yield" for investors in Auckland at the moment. "I'm advising clients not to go there for cash flow if that's what they are after."
He said there were discounts to be had but not yield. "I like smaller town but not tiny ones."
He said he had invested recently in Invercargill, Whanganui and Hawera.
Areas like Tokoroa were cheap but there was no prospect of price rises, he said. "While cash flow is what keeps the vehicle of your investing going, capital gains are what makes you wealthy over time."
Kelvin Davidson, chief property economist at Cotality, said his data showed sales activity outside the main centres picking up fastest.
He said it was likely Auckland and Wellington could lag for a while.
"If you look at house prices, we've got a projection that we get a national average rise this year of 5%. I wonder if that is probably going to be a bit below 5% with the way things are going but as a round number, call it 5%.
"It wouldn't surprise me if. say, Auckland and Wellington are below that number and Invercargill, Nelson, some of these more second-tier cities are a bit stronger. I could see that lasting for a while just reflecting the shape of the economy at the moment."
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