NZ Property Market Podcast: House Prices Fall for a 7th Month in a Row as Auckland Nears $1m

Nick Goodall (00:00):
And welcome to the New Zealand Property Market Podcast, brought to you by Cotality for the ninth of November 2026. I am Head of Research, Nick Goodall, and I am joined, as per usual, by Chief Economist, Kelvin Davidson. Kelvin, I am not quite sure what to say about the New Zealand general election, given we are left in political limbo at the moment. We will leave that discussion until the end of the episode to explore the potential implications for the New Zealand housing market. First, let us get into the Cotality Home Value Index for October, which we released last week. How did that data release and your conversations with the media go?

Kelvin Davidson (00:33):
Yes, the October Cotality Home Value Index shows a continuation of recent trends. I am trying not to overuse that phrase, but we really are seeing the same market dynamics roll on. Property values recorded a zero point four percent fall at the national level in October, matching the zero point four percent decline we saw in September. That marks seven monthly falls in a row. The housing market is not collapsing, but it is experiencing a sustained drift lower.

Across the main urban centres, Ōtautahi (Christchurch) and Ōtepoti (Dunedin) remained relatively flat, while Tāmaki Makaurau (Auckland) and Te Whanganui-a-Tara (Wellington) fell again. It is very much on a repeat cycle. However, when you look beyond the main centres to the next tier of provincial towns and cities, there was a noticeably softer tone in October. In previous months, markets like Waihōpai (Invercargill) or Ahuriri (Napier) recorded modest gains, whereas the October figures were down almost everywhere to differing degrees.

There is no immediate end in sight to this weak patch. The wider New Zealand economy is still showing mixed signals—some indicators are improving, while the third-quarter labour market figures have not picked up yet. When you combine economic uncertainty, post-election political limbo, global geopolitical tensions, and household cost-of-living pressures, it is difficult to see what turns the housing market around in the short term.

Sales volumes are still drifting lower, and there is a high level of listing stock on the market, which gives buyers strong pricing power. However, active buyers still have to clear bank lending hurdles and serviceability criteria, so it is certainly not a free-for-all. With the election count extending for a few weeks before we head into the Christmas holiday slowdown, this subdued pattern is set to continue into the new year.

Nick Goodall (02:45):
I can hear the frustration in your voice regarding how little the overarching trend has shifted! I jotted down several specific figures from the October Cotality Home Value Index that illustrate the cumulative effect of these monthly declines. Looking at the annual figures, both the wider Tāmaki Makaurau (Auckland) region and the wider Te Whanganui-a-Tara (Wellington) region are down four point two percent over the past twelve months.

For the wider Tāmaki Makaurau (Auckland) Super City region, the median property value is now sitting at one point zero zero six million dollars—very close to dropping below the one million dollar mark. Slipping back below one million dollars feels like an unusual reverse milestone, though it is a positive sign for housing affordability and first-home buyers trying to enter the Tāmaki Makaurau (Auckland) market. It also partly reflects the wave of more affordable, higher-density townhouses built over the past five to eight years, combined with the broader pullback in property values. If Tāmaki Makaurau (Auckland)'s median value drops below one million dollars over the next couple of months, it will certainly generate headlines.

Within the Tāmaki Makaurau (Auckland) boundaries, North Shore property values are down five point two percent over the past year, while the central Auckland City isthmus is down five point one percent. In the wider Te Whanganui-a-Tara (Wellington) region, where values fell four point two percent overall, Awakairangi (Lower Hutt) dropped five point four percent over the year.

Stepping outside the main centres into the regions, Heretaunga (Hastings) stood out with a five point six percent annual decline, demonstrating significant weakness in parts of Te Matau-a-Māui (Hawke's Bay). On the flip side, Waihōpai (Invercargill) remains up four point three percent over the past twelve months, making it one of the stronger performers among the secondary cities—though even Waihōpai (Invercargill) has recorded slight monthly declines recently.

Ultimately, the balance of power remains firmly with buyers. Listing supply is high, and with the Christmas and January holiday period approaching, it is hard to see any dramatic turnaround before February. Let us move on to the macroeconomic data. We received the Stats NZ third-quarter labour market data last week. Can you walk us through the headline employment figures and explain how they influence your expectations for the Reserve Bank of New Zealand's next Official Cash Rate decision on the ninth of December?

Kelvin Davidson (06:41):
Before we jump into the labour market, I will quickly add two observations on those October Cotality Home Value Index numbers. First, seeing the North Shore down five point two percent and the central Auckland City isthmus down five point one percent is a timely reminder that upper-end, expensive suburbs are not immune to a housing market downturn. Second, while we never label market downturns as inherently good or bad, these conditions are genuinely favourable for buyers who have their finance sorted.

Turning to the third-quarter Stats NZ labour market release, the headline unemployment rate rose from five point six percent to five point seven percent. That is the highest unemployment rate New Zealand has seen since roughly 2015 or 2016, sitting well above the decade average of around four point five percent. There is clear spare capacity in the New Zealand labour market, putting bargaining power firmly in the hands of employers rather than employees.

The increase to five point seven percent was a surprise, as most economists expected the unemployment rate to edge down or hold flat. Within the underlying data, the working-age population grew as usual, while the labour force participation rate dipped slightly—reflecting the "discouraged worker" effect, where softer hiring conditions prompt some people to stay in education or childcare rather than actively seek work. Normally, those two forces offset each other. However, the surprise swing variable in the third quarter was a zero point one percent fall in total employment, despite monthly filled-jobs indicators and business confidence surveys previously looking slightly brighter. Unlike previous quarters where unemployment rose due to a larger labour force, this rise was driven by fewer jobs.

This employment softness reinforces our subdued outlook for the housing market and keeps wage growth contained. Throughout 2026, a primary concern for the Reserve Bank of New Zealand has been "second-round" inflation—where higher living costs prompt workers to demand higher wages, embedding inflation into the domestic economy. With unemployment at five point seven percent, employees lack the leverage to negotiate big pay rises, meaning wage-push inflation risks are not materialising.

Consequently, the probability of an Official Cash Rate hike on the ninth of December has decreased. However, I still lean slightly toward an Official Cash Rate increase—putting the odds at roughly fifty-one percent in favour of a hike. Why? Because labour market data is a lagging indicator and is typically the last domino to turn in an economic recovery. Furthermore, fourth-quarter headline inflation is forecast to rise sharply, and at their previous monetary policy meeting, the Reserve Bank of New Zealand committee indicated that holding the Official Cash Rate was largely a matter of timing. Still, if incoming economic data over the next three to four weeks remains soft, the Reserve Bank of New Zealand could easily opt for another hold in December and reassess in the new year. Either way, rising unemployment is unwelcome news for households.

Nick Goodall (12:55):
That is the core takeaway: nobody wants to see the labour market struggling. Consensus expectations pointed to the unemployment rate ticking down from five point six percent to five point five percent, or holding steady. Seeing unemployment rise while private sector wage growth lags behind public sector wage growth confirms that employees are simply focused on job security rather than demanding pay rises. Hopefully, because employment lags the broader economy, we begin to see job growth recover over the summer.

Regarding the Reserve Bank of New Zealand's ninth of December Official Cash Rate decision, I agree that while the softer jobs data reduces the odds of a hike, a rate lift remains slightly more likely than not. The Reserve Bank of New Zealand views current monetary policy settings as somewhat stimulatory and wants to return the Official Cash Rate toward a neutral setting of around three percent to three point two five percent. As Kiwibank economists noted ahead of the previous decision, there is a strong case for the Reserve Bank of New Zealand to get that adjustment done before the long summer break.

Looking globally, I also wonder how geopolitical events in the Middle East and last week's United States midterm elections—which saw a strong swing toward the Democratic Party—might affect the conflict with Iran and global oil prices. If a diplomatic resolution brings petrol prices down sooner rather than later, headline tradable inflation in New Zealand might prove less sticky than feared. What is your read on the United States midterms and the Middle East situation?

Kelvin Davidson (16:14):
From the post-election analysis I have followed, commentary is quite divided. One perspective suggests that with the United States President entering a "lame duck" phase after the midterms, more moderate voices could step in to negotiate and de-escalate tensions with Iran, helping ease global oil and fuel prices.

However, the counter-argument is that lame-duck presidents still wield considerable foreign policy authority, and regimes in the Middle East might view domestic political division in the United States as a sign of weakness—potentially prompting them to push harder. So, we certainly cannot assume global geopolitical risks or fuel price pressures will disappear anytime soon; in some scenarios, they could even intensify.

Nick Goodall (17:55):
Fair point—unpredictability is guaranteed on that front. Let us bring the focus back home to Saturday's New Zealand general election. As we noted at the start of the podcast, the country is in political limbo while roughly four hundred thousand special votes are counted ahead of the official declaration on the twenty-seventh of November.

Historically, special votes tend to lean toward the left bloc, though some political commentators suggest that swing may be less pronounced this year. As the preliminary numbers stand, the current coalition government remains in the strongest position to form the next administration. However, because the smaller coalition parties secured a higher share of the party vote—and the National Party lost several experienced Members of Parliament—the minor parties may hold greater negotiating leverage. For the property market, that raises the question of whether the ACT Party will push harder on policies such as removing tax loss ring-fencing on residential property portfolios.

Alternatively, if the special votes swing the seat count, The Opportunities Party (TOP) could become a kingmaker on the crossbenches, or we could even face the prospect of a hung parliament—which nobody wants. Overall, assuming the current coalition forms the government, I do not expect major policy disruption for the New Zealand housing market. Do you have any other observations on the election outcome?

Kelvin Davidson (21:04):
Everything hinges on those four hundred thousand special votes—and it is always frustrating how long special votes take to count in an era of modern technology! Working from what we know today, the baseline assumption is that the current coalition government continues, which means policy continuity for the property market.

One crucial change from a housing perspective, however, is that Housing Minister Chris Bishop will no longer be leading that portfolio. Regardless of where people sit politically, Chris Bishop has done a widely praised job championing housing supply, urban intensification, and Resource Management Act (RMA) reform. That policy direction has made a genuine difference to New Zealand's housing supply pipeline and long-term affordability. Whoever takes over the housing portfolio needs to carry that planning and supply reform forward.

Nick Goodall (22:47):
That is a great point. Across all our industry conversations, there has been strong, bipartisan support for Chris Bishop's single-minded focus on building more homes and enabling urban intensification. Boosting supply is the fundamental long-term fix for New Zealand housing affordability, so let us hope his successor maintains that exact momentum.

Before we get into our weekend sporting wrap, we have our quarterly Cotality Pain and Gain Report releasing this Thursday. Would you like to tease what listeners can expect from that release?

Kelvin Davidson (24:27):
There will not be too many surprises in Thursday's third-quarter Pain and Gain Report: resellers are experiencing a bit more "pain" and a bit less "gain". Because New Zealand property values have drifted lower across most regions, homeowners who need to sell right now face the reality of potentially achieving a lower price than they originally paid, depending on their hold period and location. While that is challenging for sellers, the flip side is that market conditions remain very constructive for buyers. With election coverage dominating the headlines early in the week, journalists should be keen to cover the Pain and Gain findings on Thursday.

Nick Goodall (25:17):
Absolutely—four days of political speculation will be plenty, so Thursday's Pain and Gain Report should get great media traction, especially when people look at the top and bottom extremes of resale profits and losses.

Now, onto a massive weekend of sport! Between the Black Caps cricket on Saturday, the Wellington Phoenix taking on Auckland FC in the A-League derby, the Kiwis rugby league test on Saturday night, and the All Blacks playing Scotland on Sunday morning, what filled your weekend, Kelvin?

Kelvin Davidson (26:00):
Pretty much all of those events, alongside a bit of election tracking! We had great spring weather down here in Ōtautahi (Christchurch), fitted in the kids' Saturday morning cricket and swimming lessons, and hosted a neighbourhood election barbecue. I had the All Blacks match against Scotland on in the background during breakfast on Sunday morning. They got the win, though for me the marquee match of this Northern Hemisphere tour is always England at Twickenham in two weeks' time. How was your weekend?

Nick Goodall (27:06):
The All Blacks play Wales this week, which should be straightforward before that massive clash against England at Twickenham. I woke up at three o'clock in the morning to watch the Scotland test. The first half was tight due to ill-discipline from the All Blacks, but they tidied up their defence, set piece, and discipline in the second half to pull away to a forty-three to twenty-one victory—even if it did not feel like a vintage performance. Hopefully Will Jordan and Jordie Barrett recover quickly from their late injury knocks in time for England.

At home in Te Whanganui-a-Tara (Wellington), we had multiple screens running on Saturday evening. The kids were fascinated by the election coverage and asking how the Mixed Member Proportional (MMP) seat allocation works when the National Party and the Labour Party are both sitting near twenty-nine percent of the party vote!

On the other screen, I watched the Wellington Phoenix secure a hard-fought draw away against Auckland FC—earning our very first point in seven A-League derby clashes and keeping our spot near the top of the table ahead of the return match in Te Whanganui-a-Tara (Wellington) on the nineteenth of December. The Kiwi Ferns and Kiwis both delivered positive rugby league results on Saturday night, and the Black Caps nearly pulled off a miraculous one-day international victory defending just one hundred and thirty-four runs before the rain stepped in! Add in coaching my son's first Saturday morning cricket match and a Sunday trip to the swimming pool, and it was a brilliant weekend making the most of the longer daylight hours.

Kelvin Davidson (31:00):
It certainly feels like the year is moving quickly. Looking at the calendar ahead of the Reserve Bank of New Zealand's ninth of December Official Cash Rate decision, there is plenty of work to get through before Christmas, which is always a good place to be.

Nick Goodall (31:14):
Exactly right, mate. Thank you, as per usual, for your thoughts and insights, Kelvin, and thank you to everyone for listening. Please get in touch with any questions, feedback, or your thoughts on what the election result could mean for the New Zealand property market. My name is Nick Goodall, he is Kelvin Davidson, and you have been listening to the New Zealand Property Market Podcast. Mā te wā.