Falling prices put them in their best position in two decades
New Zealand’s property market is slowing, with fresh figures showing sales activity easing and house values continuing to edge lower. Cotality NZ’s September Monthly Housing Chart Pack points to affordability gains and a growing role for first home buyers, even as overall momentum cools.
The report showed residential property sales fell 5.2% in August compared with a year earlier, only the second annual drop in more than two years. Values also slipped, with the Cotality Home Value Index down 0.2% for the month, extending a run of five consecutive declines.
Chief property economist Kelvin Davidson (pictured) said the shift is altering the shape of the market.
“The recent property value downturn, while a reminder of market caution, is creating a more favourable landscape for buyers. We’re seeing a clear shift in market composition, with first home buyers in their strongest position in two decades,” Davidson said.
First home buyers represented 27.5% of activity across July and August – the highest share in many years. Multiple property owners with mortgages were close behind at 24.6%, while people moving house accounted for a smaller proportion than usual.
Davidson noted that lower prices are helping reduce reliance on high loan-to-value ratio lending. In July, low-deposit loans to owner-occupiers accounted for 12.9% of lending, well under the 20% limit.
“What might be discouraging for some property owners is beneficial for those on the other side of the coin,” Davidson said, adding that softer values, easing listings, and borrowers rolling off older fixed-term loans are factors that could support a stronger outlook in 2026.
The Chart Pack also reported that New Zealand’s residential property market is valued at $1.65 trillion, with 87,875 sales recorded in the year to August. There are about 26,100 properties currently listed, a level that remains high but is gradually falling as transactions accumulate.
Other data pointed to gross rental yields of 3.8% – the highest since mid-2016. Rent growth remains subdued, with slower migration and plenty of rental stock keeping conditions soft. Smaller investors are beginning to return, focusing on lower-priced existing homes, while mortgage lending continues to rise as borrowers shift banks when fixed-term loans expire.
Inflation has moved back within the Reserve Bank’s 1% to 3% target range, and with the economy still subdued, the official cash rate is widely expected to fall again, potentially reaching 2.5% by the end of the year.
