Georgina Bond
Property investors are growing more cautious as the housing market remains subdued, with sales falling, listings remaining high and little sign of a broad-based recovery in property values.
Purchasing by mortgaged multiple-property owners has fallen for the second successive quarter, as investors face low rental growth, higher ownership costs and uncertainty about what a change of government might mean for property taxes.
Cotality’s NZ Monthly Housing Chart shows there were 6,829 residential property sales across the country in June, down 4% on the same month last year and marking the sixth consecutive monthly decline in transaction volumes.
Over the first half of this year, sales activity was 4.2% lower than in the first half of 2025.
This is keeping listings high by historical standards, meaning buyers have more choice and stronger negotiating positions.
Cotality NZ chief property economist Kelvin Davidson says the balance of power has shifted decisively towards buyers.
“Buyers have options, time on their side and in many cases the ability to negotiate harder than we’ve seen for several years.
“There’s no obvious catalyst for a sharp turnaround at present. With listings still elevated and economic uncertainty lingering, we expect market conditions to remain relatively subdued through the second half of the year.”
Caution grows
While first-home buyers are still one of the most active groups in the market, purchasing activity from mortgaged multiple-property owners, including many smaller-scale or “mum and dad” investors, has eased in recent months.
That suggests the current market is being supported more by owner-occupier demand than by investors.
However, a separate survey of 225 property investors by independent economist Tony Alexander and the Property Consortium suggests the retreat in investor appetite may be starting to level out.
The July survey found the earlier decline in investors planning to buy another property had flattened out. Most investors still plan to hold their properties for at least six years, with a small uptick in the proportion saying they expect to hold for 10 years or never sell.
While this doesn’t point to a sudden return of investor demand, it might suggest the earlier decline in investor sentiment could be losing momentum.
It also suggests the current caution among investors is more about delaying new purchases and managing existing portfolios than a broad-based rush to exit the housing market.
Cotality says investors continue to face pressure from the cost of holding property. Council rates and insurance costs were the two biggest concerns about future returns in Alexander’s survey.
Landlords are still reporting difficulty finding good tenants but those pressures have been gradually easing since late last year, suggesting some improvement in the balance between rental property supply and tenant demand.
Some property investors are also worrying about the potential for changes to property taxes under a future government, with the prospect of a capital gains tax and changes to interest deductibility among the issues being watched most closely.
This is echoed in Alexander’s survey, that found concerns about possible changes to tenant legislation and the loss of interest deductibility were creeping higher ahead of the election.
“While housing remains an attractive long-term asset for many New Zealanders, some investors are closely monitoring the policy environment and considering how potential regulatory, or tax changes could affect returns and cash flow,” Davidson says.
“A potential capital gains tax is a concern for investors. But many are perhaps even more worried about the risk of interest deductibility being phased out again.”
The restraint comes as the wider market continues to offer buyers considerable leverage.
As sales volumes fall and stock levels stay high, investors are not only weighing the potential returns from buying property but also the risks associated with holding costs, tax settings and future rental income.
A quiet outlook
Looking ahead, the outlook for the second half of 2026 remains relatively quiet.
Slightly stronger population growth on the back of net migration, broadly stable employment and lower mortgage rates than those seen at the peak of the recent cycle continue to provide some support for housing demand.
But the high level of listings and cautious buyer behaviour is expected to keep market conditions balanced.
“The housing market is currently lacking a strong catalyst for a sustained upswing,” Davidson says.
“As a result, the second half of 2026 is likely to look similar to the first, with modest sales activity and generally flat property values across much of the country.”
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