The Bayleys Insights & Data team has released its New Zealand Development Land Market Update highlighting significant recent land sales and providing a snapshot of market drivers for the year ahead.

Softer land prices, infrastructural challenges, and project feasibility concerns off the back of high interest rates and recessionary pressures meant 2024 was tough for the development residential sector, says Bayleys national director development land, Gerald Rundle.

“Residential new-build sales activity went off the boil, and asset values took a hit, so we saw a build-up of inventory which sent a ‘hold fire’ message to the development sector.

“But 2025 is showing promise and while the lower interest rate story is key, just how quickly that chips away at the high inventory of existing residential stock is the unknown.

“Developers need to operate from a platform of confidence to deliver new product and they’re watching from the sidelines, with some merely focusing on clearing stock. If houses are not selling, it’s very hard to go out there, secure finance, buy new land and develop it.”

Well-capitalised developers are actively looking for opportunities, and there’s been a shift towards second-tier lending to get projects off the ground which mirrors trends in the Australian market.

“Those prepared and able to commence a development today will arguably be selling projects into a rising market and we expect to see greater new-build activity this year as developers position themselves for the next growth wave,” says Rundle.

“Getting investors back into buying mode will be vital to clear the backlog of existing housing assets and to also push new developments along through pre-sales.

“Growth propels growth and with price rises of around five percent being talked about in the industry, getting ahead of the curve will be a focus for investors.”

Infrastructure handbrakes have been a major challenge for developers in delivering land and completed buildings to the market. Rundle says government moves to cut red tape may help with the supply of developable land in the longer term, but immediate challenges remain.

“The government is replacing the Resource Management Act (RMA) with a more enabling planning system intended to pare down administrative and compliance costs.

“Meanwhile, the lack of favourably zoned and fully serviced greenfield land is being addressed. The progression of the government’s Going for Housing Growth (GfHG) strategy, with Stage 2 announced in February aiming to boost land availability, upgrade infrastructure, and drive affordable housing development nationwide, is encouraging.

“GfHG targets will require New Zealand’s 24 main urban and provincial councils to ‘live-zone’ feasible development capacity to provide for at least 30 years of housing demand at any one time across existing urban and/or rural land. We’re talking development ‘up and out’, with mandatory intensification zones around high-capacity transport corridors and incentives for councils that proactively unlock land for housing.”

Infrastructure Minister Chris Bishop recently announced that protections on Land Use Capability (LUC) 3 land will be removed to open it up for housing. The government also launched a new Greenfield Model, with up to $100 million in lending available to residential housing developers for infrastructure – ultimately to be repaid by homeowners through an annual levy.

“This is part of broader reforms around development contributions versus levies given that cost apportionment for new or upgraded infrastructure is a sticking point for new development,” explains Rundle.

“Having a more predictable environment for developers to plan in sounds good on paper, but it will be interesting to watch how this translates to action in real time.”

Bayleys’ New Zealand Development Land Market Update also highlights developer drift to regional areas to unlock new opportunities. This is typically driven by markets outside of Auckland performing comparatively better over recent years, alongside the perception that these areas are easier to operate within for consenting and infrastructure purposes.

Bayleys national director of projects, Suzie Wigglesworth says Queenstown-Lakes District, Hamilton and Tauranga have benefitted from this shift in focus.

“Building activity over the past year in Queenstown has been four times that of the national average in a surge driven by developers and local authorities to bring a new wave of townhouses, apartment and bare land sites to the market.

“The positive market response to many of Queenstown-Lakes District’s latest developments highlights the unique housing dynamics that underpin the region’s resilience. Queenstown has outperformed the national market, with ongoing demand from domestic and international buyers driving strong presales across key developments.

“A new tranche of quality developments supports housing supply while maintaining the high standards expected in such a world-class destination, with the ability to attract high-net-worth and out-of-town investors a key factor here.”

Wigglesworth says government policy is aiming to tackle regional legacy issues head-on. “Developers need certainty – and that comes from clear planning rules, well-sequenced infrastructure projects, and supportive councils.

“With momentum building and policy settings becoming more development-friendly, the conditions are ripe for a new era in residential development.”