July HVI Drops 0.3%: Regional Splits & Cow Post

Nick Goodall (00:00): Kia ora and welcome to the New Zealand Property Market Podcast, brought to you by Cotality for the 3rd of August 2026. I'm Head of Research, Nick Goodall, and today I'm joined, as per usual, by Chief Economist Kelvin Davidson. Kelvin, we'll get into a bit of labour market chat later on. But first, our Home Value Index for July went live over the weekend. How did that release go, mate? A little bit different having the data out there on a Saturday. I hope it didn't take up too much of your weekend, and what did the data tell us?

Kelvin Davidson (00:28): Yeah, no, there was no time commitment on Saturday, so that was okay. To be fair, I wasn't actually watching the media inbox, now that you mention it, so it might have been my own fault! But no, I spoke to a lot of journalists on Friday afternoon. The usual radio and print journalists ring during that embargo time, so yeah, decent interest. You know, that whole thing of trying to spin it in an interesting way because the figures themselves were still relatively soft.

Perhaps when you really take a look at the numbers, if anything, it had a slightly weaker tone, so perhaps that did generate some interest. We had a -0.3% fall over July in the national median value, sneaking lower. That was actually the fourth fall in a row. Now, there's maybe an element of seasonality in there—we're into that winter period, so maybe it's not totally surprising. But I think the bigger picture still holds: the market's pretty weak, there is that slight downwards trend, which is what you'd anticipate with listings still high, economic uncertainty still high, and interest rates maybe sneaking higher. We know the OCR's gone up already, of course. I don't think all of the banks have reacted yet, but certainly a couple have.

There are probably no great surprises in there. Christchurch and Dunedin are sneaking higher. You wouldn't call it strong growth, but Christchurch was up 0.1% and Dunedin up 0.2%. There's still, I suppose, that slight North-South angle going on in here. We saw Auckland and Wellington falling again, so in some ways, that's a continuation of recent trends. I think it just fits with what we're seeing in the economy: uncertainty still there, mortgage rates, and people feeling a little bit uncertain. Buyers have the pricing power, so of course you'd anticipate that the tone of house price figures would be a little bit soft.

It's interesting, I listened to your podcast with the guys from Loan Market in Dunedin last week. We've been talking about investors, and part of the press release for the Home Value Index was just saying first-home buyers are still enjoying conditions while investors are a little bit cautious. I was interested to hear their comment about starting to have conversations with investors around waiting for the election. People who might otherwise have been interested in looking at a house, taking out a mortgage, or buying a rental property are now seeing that election on the horizon and maybe just saying, "You know what, I'll wait." There are still buyers out there—first-home buyers are doing really well—but there are those stories coming through now of other buyers just holding off a little bit. It's difficult to really see this turning around with economic uncertainty still out there, the election coming up, and buyers in the ascendancy. It feels as if things will just tick sideways or even tick a little bit lower in the coming months too. Interesting release; go check it out on our website.

Nick Goodall (03:30): I'll make sure I leave a link to that in the show notes as well. There has been plenty of coverage off the back of this and other data out there, talking about this being the longest downturn in thirty or forty years. That tone has definitely changed, and that's partly off the back of weakness here. 0.3% down in a month and 1.0% down in a quarter certainly sticks out as newsworthy, right? There was a little bit more in there than maybe we anticipated and than we'd seen in previous months, and some of those revisions of previous months have gone a little bit further down as well. When you add a few months together, you're certainly seeing that downward trend become quite real, not so much just sideways anymore.

It is worth noting those ones that are bucking the trend, right? Dunedin and Christchurch, as you mentioned, were up slightly over the month and flat to slightly up over the quarter too. On an annual basis, Christchurch is up 3.6% and Dunedin is up 3.3%. They certainly are outliers compared to those North Island centres, though I did note Tauranga was still up 2.1% over the year, but the quarterly and monthly figures had turned negative. Most of that growth had happened in the previous six to nine months, and we're maybe starting to see values downturn in Tauranga.

Off the back of the chat with Ryan and Ben from Loan Market Dunedin, Dunedin is obviously sticking out there, but Invercargill is incredible—1.2% growth over the month, 1.7% over the quarter, and 8.2% over the year! That is just nothing like anywhere else in the country, right? You mentioned in the release there was Invercargill and a few of those other small centres in the South Island that have hit new peaks. In Invercargill's case, a $565,000 median value—still relatively affordable. That stuff just jumps out as interesting, and it has led a lot of the conversation since the release over the weekend.

It's been a theme we've talked about for a long time, comparing the North Island and South Island economies. I'm not sure if you saw the chart from Satish Ranchhod, our friend from Westpac, posted on LinkedIn last week, which looked slightly tongue-in-cheek at the population of cows per capita compared to house prices and found there was a correlation there. Obviously not saying just go and buy some cows and suddenly your house price is going to go up, but really just another way of reflecting the fact that the agriculture industry has been the strongest in the economy. It's another reflection to show that the parts of the country that have stronger support from the agricultural industry have seen that flow through to increased house prices. Revenue for those types of organizations and businesses directly or indirectly involved in agriculture has done better, and that means consumers are more willing and able to purchase properties. Quite a good one, but again reflecting some of that division between the islands in a broad sense, and certainly seeing that strength in the Canterbury region and the Southland and Otago regions compared to those main centres in the North Island, including Auckland and Wellington. Another interesting way of looking at it, that's for sure.

Kelvin Davidson (06:40): Definitely. It was definitely tongue-in-cheek from Satish, and it's more of a correlation thing than causation, for sure. But it's interesting that you referenced Invercargill being at a new peak in terms of property values. There are only three other areas that are in nominal terms at a new peak: one of those is neighbouring Gore for Invercargill—again, a farming area with house prices at a new peak. Then you've got Mackenzie District and Hurunui. These are smaller districts, but strong in either farming or tourism or both, and they've got house prices at a new record high.

Now, for me, whether house prices are at a new record high is neither here nor there, but the interesting thing is that it matches up with the shape of the economy. That's the interesting story for me. If you take a market like Auckland, peak-to-trough it might still be sitting 24% or 25% below the peak, and Wellington is somewhere around there as well. There are big regional divergences in terms of how things have played out in the last four or five years, and again, that's the shape of the economy when you look at services, retail, and these sorts of things. Interesting contrasts, and Invercargill came through on last week's podcast as well, so probably worth a listen.

Nick Goodall (08:08): For sure. That's the contrast for me, right? Wellington is 26% down on peak and Invercargill is at a new peak—that's a big difference. There are other strong agricultural centres in the North Island that haven't necessarily seen that same growth either, so it's not just because of that; there are other factors influencing this as well, and it's worth acknowledging that. You look at somewhere like New Plymouth—another strong agricultural industry, yet values are still 6.5% down from peak. Certainly better than the likes of Wellington and Auckland, but not quite as strong as Invercargill or parts of the Canterbury region. It's not like it's one-way traffic for any agricultural centre either, but it's certainly one of the factors alongside tourism. There will be other factors influencing that as well, whether it's affordability pressures or other local economic factors. Go read the release, and I agree, go listen to that podcast as well—a good 45 minutes with the guys from Dunedin.

The second half of this chat, Kelvin, is probably mostly in sync with what we're talking about. I want to talk about the Filled Jobs data for June, which came out last week—nice timing in anticipation of the official labour market data for Q2, which is out this Wednesday. Filled jobs was slightly up compared to May, but what is the expectation of what we might see from an unemployment perspective when the labour market stats come out this week? It might also be worth touching on the business and consumer confidence data from ANZ last week, which was surprisingly strong. Do you want to give us the run-through of those numbers, mate, and wrap that into a broad economic health check?

Kelvin Davidson (10:17): Filled Jobs is a monthly indicator from Stats NZ, up 0.1% in June. Not a major change, but better than a fall. The thing with these numbers is they do get revised: May's number was originally at +0.3% and then got revised down to +0.1%, so that initial +0.1% for June could well be revised negative potentially. But for now, you take it at face value and say, "Okay, yep, there might not be a lot of job growth, but at least they're not falling."

That's something we've seen really for the past couple of years: there's a sense that there's economic uncertainty, but firms want to hang on to their workers if they can, because a recovery is going to come at some point and you don't necessarily want to have to scramble around for staff. You try to hoard labour as long as you can. That's why people talk about the labour market being a lagging indicator, because firms hoard labour, and in a recovery, even when GDP is recovering, hiring might take a while to pick up because firms already have the staff.

We've probably seen that for a while: employment has been relatively steady and resilient given everything going on. But the unemployment rate has still gone up because we've got more workers—there's population growth, people migrating to New Zealand, and people coming into the labour force because they've finished school or university. That's been the dynamic: we've had a higher unemployment rate, but it's not necessarily because of job losses; it's because of a bigger labour force.

That has had implications for the housing market. We've talked about mortgagee sales, non-performing loans, and the lack of those things. You see the unemployment rate go up, but that's potentially come from people who wouldn't have had a mortgage anyway. People that have already been in the housing market and in work have been insulated to some degree, limiting that pass-through to non-performing loans. But new people coming into the labour force who might have wanted to get a job to enable them to get a mortgage have perhaps been struggling a little bit. We saw a little bit of job growth in June—definitely not strong, but part of that wider story of relatively flat employment. Not a lot of sign of wage growth yet; the unemployment rate is still above normal, so we're in this holding pattern with housing market indicators and labour market indicators.

As you said, we've got the benchmark quarterly official labour market figures from Stats NZ this week. Expectations seem to be that we'll have pretty flat employment, with job numbers staying steady, but we may well see the unemployment rate edge up a little bit because of a bigger labour force—going from about 5.3% unemployment to 5.5%. Again, not necessarily because of job losses, but because you've got a bigger labour force through more people in the country or more people participating in the labour force. It's a market that's in favour of employers at the moment, not necessarily employees. Wage growth is still pretty subdued; you're probably happy to have a job rather than asking for much wage growth. That whole second-round thing the Reserve Bank is concerned about isn't necessarily evident right now in terms of people asking for dramatically higher wages, but just because it's not there now doesn't mean it won't be there. The Reserve Bank wants to get ahead of the curve on that and get that OCR back towards a more neutral level to give a normal starting point.

There was a pretty good bounce-back in business and consumer confidence from the ANZ surveys for July. Business and consumer confidence bounced up, and inflation-type measures tailed off a little bit—input costs, output prices, and overall inflation expectations drifted down a little bit. You look at those numbers at face value and say, "Great, higher business confidence, higher consumer confidence, inflation measures looking softer." But with confidence measures relating to July, August might look a little bit different again because we've seen the peace deal break down and conflict break out again between the US and Iran. You wonder if firms and households see that and report a weaker result for August. You take it at face value—it's good we've had filled jobs and better confidence—but you just have a degree of caution and a pinch of salt, because things can change quickly.

Nick Goodall (16:16): The question for that business and consumer confidence data is exactly when the surveys were completed. There's a chance it was while the peace deal looked pretty good, but a week or two later, things might not have been so positive. Not to be too negative or write all positive data off as no good, but it's worthy to have that level of caution.

From an unemployment perspective, that unemployment rate—correct me if I'm wrong—would be above where the Reserve Bank's forecast was if it does increase to 5.5%. I'm pretty sure their forecast was for it to stay relatively flat at 5.3% for a long time and they didn't see an increase coming further, thinking it had already peaked. I wonder what influence that might have. If it shows a weaker labour market, that's going to flow through to a weaker economy and less upward pressure on inflation too. Is there a chance this latest data makes them pause for a moment and ask if they need that next OCR increase in September? Any thoughts on that if this comes in above expectations?

Kelvin Davidson (17:48): There's always a chance. We have a reasonably flat outlook for the unemployment rate in our charts. The unemployment rate can change—you can have a "good" rise in unemployment in the sense that you've got more people coming into the labour force. That's probably what we'll have this time: it's not about job losses, it's a bigger population. That's not good for people looking for a job, of course, but it's slightly more positive than a rise in unemployment because jobs are being lost.

If we see the unemployment rate go higher than what they're anticipating, accompanied by really weak wage figures—which is what they're really keeping an eye on regarding inflation expectations getting baked into wage demands—that would definitely be something to take note of. Does it change what they're going to do? We'll only know in a month's time when we get the decision, but it wouldn't be something they ignore. You'd probably need some other indicators accompanying that that were weak as well—like very soft filled jobs numbers, or the US-Iran situation resolving itself and petrol prices falling sharply. But the labour market figures in their own right are a big indicator, and definitely something the Reserve Bank wouldn't be ignoring.

Nick Goodall (19:51): We'll look forward to that one on Wednesday at 10:45 AM, and it will be on our run sheet for next Monday's podcast so we can dive into the detail.

That's pretty much it for most of the economic and property market chat. I did want to touch on one comment I picked up from Spotify this morning from Melanie regarding last week's podcast. She said: "I must be the only person in New Zealand willing them to put up the OCR right now. Trying to buy a house in a popular Christchurch suburb has been near on impossible these last six months. I will gladly pay a higher interest rate for a while if it means the competition buggers off."

I thought it was a good perspective to offer up because she's certainly not the only person, but it isn't the prevailing conversation. There are always two sides to everything: increasing house prices are good for people who own a house, but not so much for those trying to get into the market. Kelvin, do you want to add context on how you talk about increasing OCRs, interest rates, house prices, and how we balance that?

Kelvin Davidson (21:40): We try to bring that balance. It might not be so great at the moment for property owners or sellers, but it's a great time to be a first-home buyer or someone looking to expand their portfolio. Something we don't talk about as much is the balance between savers and borrowers. Higher interest rates are to the detriment of borrowers, but a whole bunch of people out there don't have debt and would love to see interest rates go up because it increases their term deposit rates. That saving side doesn't come through as much because it's not directly related to the housing market, but it's a great point.

It's an interesting insight into the Christchurch market. House prices aren't booming in Christchurch, but they are holding up better than in other parts of the country. This comment hints that there is competition in certain suburbs, and in this person's case, they'd be stoked to have a little bit less competition. There's never just one market—there are always those local stories going on.

Nick Goodall (23:12): Exactly. For a popular suburb seeing stronger growth—if it's growing faster than your income, it gets more difficult to make that purchase. In general, because our audience mostly consists of professionals involved in the housing market, we often talk about increasing prices as a good thing because for most people we talk to, it is. Is it better for New Zealand Inc. or the broader economy? Not necessarily. Prospective first-home buyers are happy to see prices fall. If they are doing okay and there are only minor tweaks to interest rates, most are fine with it, knowing that long-term interest rates are still reasonable compared to historical averages. Thanks very much to Melanie for posting that comment on Spotify.

That will pretty much do us for the economic and property market chat today, Kelvin. Anything else on your mind from a personal or sports perspective?

Kelvin Davidson (26:05): Nothing from a professional perspective, and a quiet weekend personally! A bit of rugby and Commonwealth Games highlights. We had an incredibly cold, windy day on Saturday, so mostly an inside day with family stuff and swimming lessons. It's amazing how good it is to have some quiet weekends now, because things will ramp up heading into the second half of the year. It seems performance targets were met for Commonwealth Games medals: Zoe Hobbs winning the 100m was awesome, and seeing the Silver Ferns win gold in netball this morning was great. A successful games for individual athletes.

Nick Goodall (27:08): Zoe Hobbs winning the 100m gold in the rain was definitely the highlight of the week—an incredible achievement in an event we don't typically dominate. The Silver Ferns capped off a strong final day by getting gold, benefiting a bit from Jamaica beating Australia in the semi-final to get their first gold since 2010.

I also saw a notification that Kiwi footballer Tim Payne made his debut for his Paraguayan club this morning, coming off the bench for twenty minutes and scoring a ripper of a goal on a first-time finish! A heck of a start for him. Also, the Bunnings NPC is underway—a great competition with decent crowds, like Stag Day in Invercargill drawing 15,000 people, Takapuna/Eden Park sold out for Canterbury vs. Auckland, and high-scoring games. It's broadcast on TVNZ this year, which is great for exposure. Other than sport and bits around the house, it was a quiet weekend here in Wellington too.

Kelvin Davidson (30:41): As you say, we're well into the second half of the year now, and with an election three months away, that's going to take up a lot of headspace over the coming months.

Nick Goodall (30:57): Absolutely, it's going to come about quickly. We'll wrap it up there for today. Thanks very much for your thoughts as per usual, Kelvin. Thanks to everyone for listening, and please do get in touch with any questions or comments. My name is Nick, he's Kelvin. You've been listening to the New Zealand Property Market Podcast. Mā te wā.

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