The market everyone's been waiting for

After a year defined by recalibration, renewed confidence, and the first signs of genuine momentum returning to the property market, 2025 has laid the groundwork for a very different chapter ahead. Lower interest rates, improved buyer sentiment, and a clearer economic outlook have helped to shift the market out of its holding pattern, setting the scene for what many experts believe could be a turning point.

Now, with 2026 on the horizon, attention is turning to what comes next: whether oversupply will start to settle, and what opportunities may emerge as the market moves from recovery into growth.

Bayleys Executive Director for Auckland Residential Jen Baird says it's been a long time in the doldrums, and it’s about time the green shoots started turning into a garden.

“There's been a lot of pain in the economy for a long time now, and real estate is a function of the broader economy.”

“People's house prices and their perception of their house price have a material impact on how they feel about their general wealth and whether they feel confident in what's to come, and I think that prices have been suppressed for a long time.”

Baird says it is clear the tides are starting to turn now, with strong activity in the last quarter of this year.

“There’s always more activity in the market in springtime, and we have certainly seen that, but there’s still a lot of choice for buyers out there, which says there’s probably no significant upwards pressure on prices just yet.”

Even so, that activity is starting to make a small dent in the oversupply - especially in Auckland.

“Activity at Bayleys is up 45% on this time last year, and nationwide across the residential market we’re also having our biggest year yet.”

“There's an energy and momentum in the business right now that’s really compelling for our people.”

While things are looking up, Baird says it’ll still take time to get supply levels back to normal.

“There’s over 35,000 properties on the market at the moment, whereas typically there’s around 25,000 for sale, and there’s more properties coming onto the market every day.”

HOW CAN WE TELL THAT THE MARKET IS HEALTHY?

Baird says there are signs of more confidence in the market.

“It’s all about open home attendance and those lead indicators of buying activity, auction attendance, and the number of bids.”

“We’re seeing a lot more activity in the auction room, and our auction listings get the most people along to open homes because there’s a deadline.”

She believes when there’s lots of competing properties for sale, what helps a vendor is doing everything you can to create a sense of urgency.

“Auctions are of course really great for that.”

WHAT CAN WE EXPECT NEXT YEAR FROM THE BUYER GROUPS?

With the housing market enjoying another cut to the Official Cash Rate, Baird says that will be a huge benefit to first home buyers.

“Interest rates are lower, and the affordability equation has changed substantially compared with a few years ago.”

“In most areas, prices are still substantially lower than their November 2021 peaks when they were at their highest, so people can buy pretty well, and of course there’s lots of choice out there.”

She says investors are also starting to re-enter the market too.

“It’s a fantastic time to buy, prices are lower on average, and the cost of leverage has come down further. This makes it not just positive for first home buyers and investors but also for people looking to trade up too.”

“Yes, your house might be worth less than a couple of years ago, but that more expensive house that you’ve been eyeing up has also come down too.”

COULD ANYTHING DERAIL THE RECOVERY?

With 2026 being an election year there’s concern that uncertainty over who might be in government could cast a shadow on the property market.

“The one thing the property market hates is uncertainty. We generally see a short slow down right before an OCR announcement if there is some contention about where it will go, so the market really hates not knowing what’s coming next.”

She says the same thing happens during an election too.

“In that lead up, it always tends to slow a little, and I think with the level of uncertainty around what that government could look like after next year’s election, we may see an impact in the market. I hope it's short lived!”

So could it risk our bounce back?

“It depends on where the economy's at, and where interest rates are at. We would expect to see a slowdown in the lead up to the election, and then after the election, once people know where the chips have fallen, they pick things up and get going again.”

Baird says another thing to consider is geopolitical factors and global uncertainty.

IS CONFIDENCE ALL WE NEED?

Baird believes sentiment has a huge influence on what direction the market is going.

“You can see it when things are going gangbusters and people are being all fizzy about it. It’s that whole sense of FOMO.”

“I think the more stories that we all hear at BBQs, and the more media there is about things being okay people really start to believe that things are going to be ok.”

She says buyers and sellers are emotional beings, and the residential market is a by-product of that.

WHAT REGIONS ARE EXPECTED TO PERFORM?

Aside from Auckland, Baird says Queenstown-Lakes continues to be a market on its own.

“It's very, very desirable with a lot of high quality development. It's also very much on the radar for wealthy expats, Australians and wider global market.”

She says you also can't ignore the Canterbury and Southland regions either.

“Those markets have in the last few years done very well relative to the rest of us.”

“There's been a huge amount of economic development in both of those areas, both with quite strong farming and agriculture industries doing really well. Those markets are reaping the benefits of that, and the property markets see the flow on effect of this.”

Baird says most signs are positive and while the green shoots might not be in full bloom yet, she believes the seeds are starting to sprout for what she describes as a “long germination.”

While forecasts can only go so far, the signals are increasingly clear: stability is strengthening, buyers are re-engaged, and developers are recalibrating for a new phase of demand. Whether growth arrives in steady steps or sharper leaps, the coming year is shaping up to reward long-term thinking over short-term reaction.

In a landscape finally finding its rhythm again, 2026 may be less about guessing the market - and more about being ready when it moves.