Both sides will need to talk with the small New Zealand First party, led by maverick 72-year-old lawmaker Winston Peters.
Turangi: New Zealanders still don't know who will next lead their country after a final vote count from a general election held two weeks ago tightened the close race between liberals and incumbent conservatives.
Election officials on Saturday released the final 17 percent of the vote tally, including votes cast by people who were outside of their district or overseas during the election. The conservative National Party ended with 44 percent of the vote, while the liberal bloc of the Labour Party and the Green Party ended with a combined 43 percent.
Negotiations to form the next government will now begin in earnest.
Both sides will need to talk with the small New Zealand First party, led by maverick 72-year-old lawmaker Winston Peters. That party finished with 7 percent of the vote, leaving it holding the balance of power.
Peters hasn't indicated which of the larger parties he favors. A former National Party lawmaker, Peters has formed coalitions in the past with both National and Labour.
In the 120-seat parliament, the votes translate to 56 seats for National, 46 for Labour, nine for New Zealand First and eight for the Green Party. The final vote count gave both Labour and the Green Party one extra seat apiece over their election night tally. Those came at the expense of the National Party, which lost two seats.
Prime Minister Bill English said voters had clearly favored National over Labour and he looked forward to engaging with Peters so National could lead a strong and stable government.
The National Party has held power for the past nine years.
"Not since 1969 has the National Party finished ahead of the Labour opposition at four successive elections, and I want to thank everyone involved in this historic achievement," English said in a statement.
Labour leader Jacinda Ardern said she welcomed the final tally.
"Today's final election count has strengthened the mandate for change," she said in a statement.
Peters has said he plans to make a decision this week.
His policies are eclectic. He wants to drastically reduce immigration and stop foreigners from buying farms. He opposes plans by the National Party to increase the pension age and plans by the Labour Party to tax certain water users.
Until negotiations are complete, English will remain as caretaker prime minister.