New build apartment report Q1 2026

Residential market outlook remains neutral

Sales activity has increased across the wider residential market, but prices remain flat in most regions. Markets in the South Island are generally performing better than those in the North Island. In the near term, price growth is constrained by relatively high levels of homes for sale, a softer economic backdrop, and subdued population growth. These conditions point to broadly stable prices through 2026.

Interest rates are the key watchpoint

While interest rates have reduced substantially from recent peaks, the market saw minor increases in some home loan rates toward the end of 2025. The near-term direction for interest rates remains uncertain. Inflation and pockets of positive economic data may place upward pressure on rates, although broader economic conditions remain difficult to predict.

Inside the apartment buyer mindset

Bayleys’ buyer survey shows that low maintenance, affordability and security are key attractions for apartment buyers. Key concerns include limited space and storage, neighbour-related issues, and rising body corporate costs. Concerns around ventilation and cooling are also likely to grow in importance following recent media coverage.

Development cycle yet to gain momentum

The next development cycle remains in its early stages. Off-the-plan sales rates are subdued, reflecting the reasonable supply of existing properties for sale and limited pressure on the wider residential market. Many developers from the previous cycle still have capital tied up in existing projects, constraining new launches. Current activity is largely led by larger players with less constrained funding, skewing the pipeline towards larger-scale schemes suited to corporate developers.

Product design continues to evolve

Recent apartment designs are delivering more storage, along with greater provision of electric vehicle charging and secure mailroom systems. Developers are placing greater emphasis on marketability alongside profitability, resulting in fewer two-bedroom, one-bathroom layouts and less reliance on flexi-room designs.

Competing products target the downsizer market

The high-end apartment market is facing increased competition from the expansion of retirement villages into more neighbourhoods, as well as townhouse designs being adapted for older buyers, particularly through the inclusion of lifts. As a result, developers face increased pressure to differentiate their schemes through design and features.