Market update - summer 2025/2026

Market momentum

As the focus for many people in the region gradually begins shifting towards planning for the Christmas and New Year periods, with an ensuing flurry of sales activity in the residential property market.

This frenetic rush toward getting up listings, marketing them to extensive potential buyers, and making sales either under the hammer or by negotiation, rounds out what has certainly been an interesting year for activity and sales trends within the residential property markets across the Lower South Island.

The latest Real Estate Institute of New Zealand sales data released in October for the Dunedin, Otago, Southland, Invercargill, Queenstown Lakes, and Central Otago districts proclaims new house price index levels being achieved in both the wider Otago and Southland regions.

The housing price index increased by 5.7 percent year-on-year for properties in the Southland region, and by 2.5 percent in the Otago region. Both increases set new highs for their values. In comparison, the REINZ’s nationwide housing price index increased by 0.2 percent.

Bayleys’ offices and sales teams in Dunedin, Mosgiel, Invercargill, Gore, Arrowtown, Winton, Cromwell, Wanaka, and Queenstown all contribute sales data and market sentiment feedback to the Real Estate Institute of New Zealand report – underpinning that our analysis of market conditions is at the bow wave of both sentiment and activity.

Southland on the rise

Leading the way, the Real Estate Institute of New Zealand statistics spotlight that Southland residential property median prices as a whole rose 7.8 percent over the 12-month period to the end of September – to now sit at $525,000, up from $487,000 a year prior. The number of properties which actually sold in the province also increased by 2.2 percent over the same 12-month period.

Broken down into specific districts within the province, the median price tracked by the REINZ for homes within Invercargill City rose 11.6 percent over the year to September 2025, to now sit at a record high of $530,000.

REINZ chief executive Lizzy Ryley said that limited housing stock numbers to choose from had underpinned the record sale price median level being achieved in Invercargill. This was mostly sustained by first home buyers being the most active purchaser group.

“Factors such as (housing) stock shortages, stable prices and reduced (mortgage interest) rates and strong buyer demand influenced market sentiment,” Ms Ryley said.

Spotlight on Otago

Meanwhile in Otago, the Real Estate Institute of New Zealand data identifies that the residential property median price of dwellings across the region as a whole rose 2.2 percent over the 12-month period to the end of September, to now sit at $700,000, which is up from $685,000 a year prior. The number of properties which actually sold also increased by 1.1 percent over the same 12-month period.

Broken down into specific districts, the median residential property prices recorded within Otago to the end of September are now:

• Dunedin City - $615,000, up two percent year-on-year
• Queenstown-Lakes – $1,523,000, up 13.7 percent year-on-year
• Waitaki District – $450,000, up 7.1 percent year-on-year

First home buyers dominant

Real Estate Institute of New Zealand chief executive Lizzy Ryley said the prospect of lower mortgage interest rates was particularly encouraging for first home buyers, with strong attendance rates at new listing open homes.

The first home buyer trend being seen across the Otago and Southland residential real estate markets has also been highlighted in the November Property Report produced by respected independent economist Tony Alexander who draws input from the wider real estate sector.

“First time buyers continue to be the main purchasers – increasing in numbers. More real estate agents view (with feedback from open home attendees) house prices as rising (more than falling) for the first time since February,” said Tony Alexander’s Property Report survey findings.

“The early signs of labour market improvement, alongside low interest rates, may see ‘fear of missing out’ remain firm this time around… and strengthen through 2026 into 2027,” added Tony Alexander.