Georgina Bond
New Zealand’s housing market remains stuck in a holding pattern, with investors and people planning to move house pulling back from the market amid economic uncertainty and concerns about likely tax changes if there is a change of government.
Cotality’s NZ monthly housing chart data shows sales volumes fell for a fifth consecutive month in May, down -8.3% compared to the same month last year.
Looking at the first five months of the year, sales activity was down -4.7%, representing 1,775 fewer transactions nationally.
Purchases by movers fell by around -11.1% in May, compared to the same period last year, while multiple property owners with mortgages have declined by -5.7%.
First home buyers were the only major buyer group to buck the trend and increase their purchases, up 2.4% compared to the same period last year.
Movers and investors pull back
While first home buyers have stepped up, movers and investors have become more cautious.
Cotality NZ Chief Property Economist Kelvin Davidson says economic uncertainty, the upcoming election and questions around future tax settings were likely contributing to less investor activity.
“Some investors will be looking at a rental market where rent growth has flattened out, while others will be acting with caution as they consider the potential policy changes that could emerge after the election,” he said.
“At the same time, movers tend to be more sensitive to confidence and labour market conditions, and that caution is still pretty evident.”
First-home buyers buck the trend
Completing 10,025 transactions so far this year, first home buyers have lifted their share of purchases from 25.8% to 27.7%, compared to the same period in 2025, cementing their position as New Zealand’s most active buyer group.
Davidson said first home buyers were taking advantage of market conditions that remain challenging for many other purchasers.
“Sales activity remains fairly subdued, but first home buyers continue to buck that trend,” he said.
“With lower property values than a few years ago, plenty of property to choose from, access to KiwiSaver and the availability of low-deposit lending have all combined to help keep first home buyers active and give them confidence to get into the market.”
The trend is most obvious in the main centres, where they account for almost 31% of purchases in Auckland and almost 39% in Wellington.
A market without much momentum
Property values remain largely unchanged, with the Cotality Home Value Index essentially flat in May. National median values were down -0.1% over the past quarter and -0.6% over the year.
Although values remain -17% below their peak nationally, performance varies significantly across the country. Christchurch remains one of the stronger markets, with positive annual growth of 3.2%, while Auckland values remain -2.6% lower than a year ago.
Davidson said elevated listing levels were limiting any significant uplift in prices.
“Even though the flow of new listings has hit a seasonal low and eased recently, buyers still have plenty of choice and that is helping keep a lid on property values,” he said.
“Most vendors are not under pressure to sell, so there’s no rush to discount and we’re not seeing widespread price falls, but nor is there any evidence of upward momentum. The market is in a neutral or holding pattern.”
Buyers still have the upper hand
New listings have eased slightly in recent weeks as the market heads into its usual winter slowdown.
The recent modest fall in stock levels hasn’t been significant enough to materially change the balance of power in the market, Davidson said.
“Although stock levels have eased a little as we head into winter, there’s still enough choice in the market for buyers to retain the upper hand when it comes to price negotiations,” he said.
“Market conditions remain much more balanced than they were during the boom years.”
Reasons for cautious optimism
Davidson said the biggest economic change over the past month had been the outlook following the recent US-Iran peace agreement.
While inflation remained above the Reserve Bank’s target band at 3.1% in the March quarter, the prospect of lower energy costs and reduced geopolitical uncertainty had improved the outlook for both inflation and economic growth.
“The possibility of an OCR increase in July appears less likely than it did a few weeks ago,” he said.
“There is still plenty of uncertainty ahead, but if the peace agreement holds it should reduce some of the inflation concerns that have been weighing on confidence.”
Lower inflation risks and a more stable interest rate outlook could help lift confidence and support a modest improvement in market activity during the second half of the year.
“Sales volumes have been weaker than expected through the first five months of 2026, but the outlook for interest rates appears a little more settled than it did a few weeks ago.
“Any recovery is likely to be gradual rather than dramatic, but the outlook appears somewhat more positive than it did a month ago – provided the peace deal holds.”
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