Housing market ‘a tale of two islands’

New Zealand’s housing market is experiencing a significant divergence between the North Island and the South Island, according to a leading economist. The latest data from the Real Estate Institute highlights this trend.

While national median prices have seen a modest increase, with Auckland and Wellington still below their post-Covid peak, the South Island tells a different story. The West Coast, Southland, Otago, and Canterbury have all seen price growth, with some regions hitting record highs.

On the other hand, the North Island is showing mixed results, with only a few regions experiencing an uptick in median sales prices. The disparity between the two islands is becoming more pronounced, leading to a fragmented housing market.

BNZ chief economist Mike Jones describes it as a “tale of two islands,” attributing the differences to factors such as internal migration, regional economic performance, and affordability dynamics.

Despite expectations of a convergence, the divergence persists, with Auckland and Wellington facing oversupply issues while regions like Canterbury, Otago, and Southland enjoy strong growth.

Property investment coach Steve Goodey advises investors to look beyond Auckland for better yields, citing areas like Invercargill, Whanganui, and Hawera as promising investment opportunities.

Chief property economist Kelvin Davidson predicts that sales activity in secondary cities will outpace the main centres, leading to a potential lag in Auckland and Wellington’s housing market performance.

Overall, the housing market in New Zealand remains dynamic and varied, reflecting the unique economic conditions of different regions.