Why movers are holding back & Q2 GDP rebounds: Will the RBNZ hike in Oct?

Nick Goodall (00:01):
Kia ora and welcome to the New Zealand Property Market Podcast, brought to you by Cotality for the 21st of September 2026. I'm Head of Research Nick Goodall, and today I'm joined as per usual by Chief Economist Kelvin Davidson. Kelvin, we've got the official GDP data to pour over later. But first, you analysed the buyer classification data to focus on raw numbers rather than market share percentages. What did you find?

Kelvin Davidson (00:24):
We typically focus on market share, but underpinning that is the actual raw volume of transactions. Looking at sales volumes, August saw an annual drop of almost 12%, marking eight consecutive months of year-on-year sales declines. Over a 12-month period, transactions are running around 90,000, which is below average.

The group driving this slowdown is relocating owner-occupiers (movers). Over the last 8 to 9 months, mover transactions have dropped by 1,500 to 2,000 deals on a 12-month basis. Movers aren't moving because of economic caution, higher mortgage rates, and job uncertainty. If you aren't confident about your job or the price you'll achieve for your current home, why take the risk of upgrading debt?

In contrast, first-home buyers are going from strength to strength, while cash and mortgaged investors have drifted lower. Movers likely won't return in force until we see stronger GDP growth and job security next year. In the short term, first-home buyers will drive market activity, keeping the lower price tiers busier than upper-tier owner-occupier suburbs.

Nick Goodall (04:56):
That creates significant pent-up demand. Homeowners who have delayed moving for three or four years could re-enter the market once confidence returns in 2027. Looking at the raw numbers for first-home buyers: they completed roughly 25,000 purchases over the past year. At the 2021 peak, they also completed around 25,000 purchases—but that was out of 122,000 total sales. Completing 25,000 deals in a 90,000-sale market highlights their incredible dominance.

Last Wednesday, we also went on an on-the-ground development tour across South and East Auckland, hosted by valuers George, Craig, and Richard from CBRE. What were your key takeaways from that tour, Kelvin?

Kelvin Davidson (09:24):
There has been a persistent narrative that townhouse values are collapsing due to massive oversupply. Our aggregate data didn't show townhouses falling significantly faster than standalone homes, so we wanted to test that on the ground.

We saw that there are good and bad properties in every cycle. A lot of the weak anecdotes stem from legacy consents granted 4 to 5 years ago during the land boom. Back then, developers paid high prices for land and had to build narrow, three-story townhouses without parking to make the sums work. That product is harder to sell today.

In contrast, newer developments feature spacious two-story layouts with better parking and design, which are selling well. We also heard of developers offering incentives—such as paying the first year's mortgage interest (~$30,000)—which protects headline settlement prices. Overall, townhouses aren't broadly failing; well-designed, well-located stock performs fine.

Nick Goodall (14:54):
Location and infrastructure remain paramount. Townhouses in master-planned communities like Tāmaki Regeneration or Flat Bush, well-connected to public transit and the City Rail Link (CRL), are performing well. First-home buyers make up 30% of purchases in Auckland because modern townhouses provide an accessible, energy-efficient entry point with low maintenance.

Turning to macroeconomics, Q2 GDP data was released last week. Kelvin, how did it compare to expectations?

Kelvin Davidson (26:53):
GDP rose 0.2% in the second quarter. Given that April to June was a challenging period with global fuel price spikes, a 0.2% increase is a solid result. It was broadly in line with expectations and ahead of the Reserve Bank's earlier projections. Construction, manufacturing, and wholesaling were positive contributors, while transport and hospitality struggled under fuel and household cost pressures.

Looking ahead, an expanding economy combined with recent fuel price increases raises the probability of the Reserve Bank hiking the OCR on October 28. It's not guaranteed, but at the margin, economic resilience pushes the odds toward a hike rather than a hold.

Nick Goodall (30:06):
The fact that construction, manufacturing, and wholesaling expanded shows businesses are getting on with operations despite higher distribution costs. The August Selected Price Indices showed inflation wasn't as bad as feared, but fuel prices in September will add pressure. The RBNZ will likely feel comfortable that lifting rates won't cause severe economic instability.

Wrapping up other news: the August Chart Pack will be released this Thursday, my 5-minute monthly video is live on YouTube, and I appeared on Lighthouse Financial's Checks and Balances podcast over the weekend.

Kelvin, how was your weekend?

Kelvin Davidson (36:08):
Opening day for the Lincoln Cricket Club, plus some lamb docking on my parents' farm. Disappointed by the Warriors' playoff loss to Newcastle, but that's sport. How about you, Nick?

Nick Goodall (37:22):
Heartbroken for the Warriors, but celebrating the Taniwha, who went top of the NPC table after beating Wellington at the Cake Tin! We have one final Ranfurly Shield defence this weekend against Counties Manukau. It is also my wife Karina's birthday today, so we're heading out for lunch.

Kelvin Davidson (40:36):
Happy birthday to Karena!

Nick Goodall (40:39):
Thanks mate. Thanks to everyone for listening. Please get in touch with any questions or feedback. 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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