NZ property sales fall 14%: is the housing market freezing up?

Nick Goodall (00:01):
Kia ora and welcome to the New Zealand Property Market Podcast, brought to you by Cotality for the nineteenth of October 2026 . I am Head of Research, Nick Goodall, and today I am joined, as per usual, by Chief Economist, Kelvin Davidson. Kelvin, we have got the Taniwha, the All Blacks, the Kiwis, the Silver Ferns, the White Ferns, and the Phoenix to talk about later. But first, let us chat property. Last week, you published the ten-year growth article, but we have covered that analysis quite well over the last few weeks. So, I might just leave a link to the full analysis, which contains the complete breakdown chart by territorial authority, in the show notes. Today, I thought we could focus more on sales volumes after we received our first data read for September last week. So, over to you. What do those sales volumes tell us?

Kelvin Davidson (00:44):
Yes, well, transaction activity is still pretty subdued. There were exactly six thousand five hundred and nineteen sales in September. That is across licensed real estate agent transactions and private sales, which is down fourteen percent from the same month a year ago. So, we are seeing a continued fall in volumes. We have now had nine consecutive months of year-on-year declines, meaning each month of this year has seen lower volumes when compared to the same month last year. This is a very clear trend for the moment.

Now, the declines are not drastic, and the market is not plunging when you look at it on a twelve-month rolling basis. We are still sitting around eighty-eight thousand transactions annually. The long-term average, depending on which historical period you measure, sits around ninety-two thousand or ninety-three thousand. So, we are not in terrible territory. If you think back to 2022 and 2023, the annual transaction total dropped to about sixty-five thousand. At eighty-eight thousand on a twelve-month rolling basis, it is not horrendous, but the market is definitely slowing.

The peak of this mini-cycle occurred in December when we recorded about ninety-two thousand annual transactions. We have already slipped four thousand sales from that peak, returning to the lowest annual transaction level seen since May last year. This is definitely not a brief blip. During the first couple of months of the year, when geopolitical tensions in the Middle East broke out, we wondered if this slowdown might be short-lived before returning to the upward sales trend we had enjoyed over the past couple of years. But this trend is now entrenched. As I said, we have seen nine months of year-on-year declines in a row.

This highlights the high level of caution among active buyers. Buyers do not feel any pressure to rush. There is plenty of listing choice available on the market. Buyers must still secure their financing, ensure they are reasonably secure in their employment, and satisfy bank stress-testing requirements. So, while buyers retain significant pricing power, they must still jump through those financial hoops to transact. On the other side of the equation, sellers do not face intense pressure to sell, and we are not seeing a lot of forced listings. While some sellers are keen to get a deal done and will accept a lower price to secure a transaction, most people remain employed. Buyers hold the leverage, but they face strict testing, while sellers can afford to sit on the market for a longer period if necessary.

Overall, this is slowing transaction speeds and dampening the overall figures. The wider economy remains soft; while there are some positive signs, there are plenty of sluggish indicators, and mortgage interest rates have trended slightly higher. These fundamental factors are keeping the market slow. It is difficult to see this trend turning around in the near term, especially with the upcoming election, the fast-approaching holiday season, and global uncertainty regarding interest rates and fuel prices.

Our internal transaction model takes into account gross domestic product, which is starting to look slightly better, and net migration, which is also improving. However, it also factors in mortgage rates, which have lifted, and wage growth, which remains subdued. With supportive factors on one hand and restraining forces on the other, the housing market is left trending right through the middle. While deals are still happening, the overarching transaction trend is down. We will keep a close eye on it.

Nick Goodall (04:39):
It is just as I mentioned in our monthly video: there is no other way to put it, the trend is down. There is no rush for anyone to purchase when property values are generally declining across most parts of the country. I also analysed the three-month transaction comparison, which measures the last three months against the same period last year. For the third quarter, which is now complete, the numbers do not look quite as drastic. The nationwide transaction volume is down nine percent—let us call it a ten percent decline in sales compared to the third quarter of last year.

None of the main urban centres escaped this transaction slowdown. The declines ranged from an eight point three percent drop in Ōtepoti (Dunedin) to an eleven point five percent decline in Te Whanganui-a-Tara (Wellington). Ōtautahi (Christchurch) was down fourteen percent over the last three months, which removes some of the monthly volatility, while Kirikiriroa (Hamilton) fell twenty percent . Across the board, our main centres are down eight to twenty percent year-on-year over the third quarter. This demonstrates that no region is escaping the slowdown. As we frequently discuss, a drop in transaction volumes often precedes a decline in property values. For many of these areas, values are already falling. Fewer transactions and a lack of buyer urgency mean we will likely see weak transaction volumes and soft values continue over the next few months. It is hard to see that changing.

We are adjusting to this environment and waiting to see how the market performs next year. It feels a bit early to be looking ahead to next year, but given the uncertainties surrounding the election, global conflicts, and interest rates, this slow trend is unlikely to shift soon. We will wait to see how the market recovers, what happens at the election, who forms the next government, and how the global economy performs. Perhaps things will flatten out and turn around next year, but we still have a few months to go before then.

This transaction data will feature heavily in our monthly Chart Pack, which will be released this week. It will provide localised detail for your specific area.

Shifting to the macroeconomic data released last week, Stats NZ published the Selected Price Indexes, which act as a precursor to the third-quarter Consumer Price Index inflation data releasing this week. Inflation is a highly relevant topic right now. What are the key details from that Selected Price Indexes release, and what are you expecting for the upcoming inflation data? Commercial bank economists and independent forecasters are watching these figures closely to determine what they mean for the Reserve Bank of New Zealand's next Official Cash Rate decision in a couple of weeks.

Kelvin Davidson (07:43):
Last week, Stats NZ released the Selected Price Indexes. This release covers about forty-five percent of the quarterly Consumer Price Index basket. While it does not represent the entire inflation picture, it is a substantial chunk that focuses on volatile items, such as tradable goods, fuel, and food. There is always a level of natural volatility in this monthly data, so we must interpret each release carefully.

Overall, the data was not as bad as some had feared, but it was certainly not great either; we still have a persistent inflation problem. Looking at the components, diesel and petrol prices spiked in September, which was expected. However, property rents remained flat. Rents are not falling as they were six months ago, but they are certainly not rising. Food prices are still increasing, but they are not spiking to the extent that some commentators feared. The data was somewhat balanced, with fuel costs rising and rental accommodation costs remaining flat. However, on a weighted average basis, inflation remains too high.

This sets a challenging scene for the full benchmark Consumer Price Index release on Thursday. In the second quarter, inflation sat at four point one percent, which is well above the Reserve Bank of New Zealand's target range of one to three percent. Most forecasters expect the third-quarter inflation figure to slow slightly to around three point eight percent or three point nine percent. While we want to see inflation slowing rather than accelerating, a figure near four percent remains a concern.

The breakdown between tradable and non-tradable inflation will be very interesting to watch. Non-tradable domestic inflation, which includes items like property rents, is likely to remain too high. The Reserve Bank of New Zealand's older forecasts expected non-tradable inflation to trend sideways. This means the focus remains on tradable inflation, which is driven by international factors like fuel and food. The Reserve Bank of New Zealand had previously projected tradable inflation to slow sharply in the third quarter to help bring down the headline inflation figure. While there is some doubt about that projection, bank economists who update their models regularly are still expecting the headline inflation number to decline slightly.

Ultimately, New Zealand still has an inflation problem well above three percent, but we should see the headline rate slow in the third quarter if tradable price pressures ease. For the upcoming Official Cash Rate decision next week, I still view it as a fifty-five percent or fifty-fifty call. The market consensus remains split. Some economists believe the Reserve Bank of New Zealand will lift the Official Cash Rate in October, while others suggest the central bank will wait until December. The domestic economy is showing highly mixed signals.

While the risk of secondary inflation impacts has not fully emerged, the data remains finely balanced. The Reserve Bank of New Zealand operates independently of political cycles and will act on the data regardless of the upcoming election. However, they may prefer to avoid making a major policy adjustment just one week before the election unless the economic data absolutely demands it. The bottom line is that inflation is still too high, and that keeps the potential for an Official Cash Rate increase on the table.

Nick Goodall (12:44):
We will deliver a comprehensive preview of the Official Cash Rate decision on next week's podcast, including our official predictions. From the previews I have read, there is a risk that domestic non-tradable inflation could rise, which would concern the central bank. While falling tradable inflation helps lower the headline figure, it is driven by international forces outside the central bank's control. I also saw a forecast suggesting inflation could accelerate again in the fourth quarter and go back above four percent. If the Reserve Bank of New Zealand shares that outlook, the probability of an Official Cash Rate increase next week rises.

Since we have some time left, let us look at the wider economic data. The Performance of Manufacturing Index was quite positive last week, but the consumer spending data was weak. What is your take on the wider economic recovery?

Kelvin Davidson (14:11):
While the Reserve Bank of New Zealand's sole mandate is inflation, they cannot ignore wider economic indicators, which continue to show mixed signals. The Business NZ Performance of Manufacturing Index looked very strong, marking its fifteenth consecutive month of expansion in September. This strength is driven by robust activity in agricultural processing, with the dairy and meat sectors experiencing strong volumes and securing good international prices.

Conversely, the electronic card spending data from Stats NZ was weak. These figures are nominal and are not adjusted for price inflation, making them slightly harder to interpret. However, card spending fell zero point four percent in September, following a zero point nine percent drop in August. Because prices have risen, flat or falling nominal spending means the real volume of transactions has declined significantly. The increase we saw in fuel spending reflects higher petrol prices rather than increased consumption. Consumers are redirecting their spending toward essential fuel and mortgage repayments, leaving less discretionary income for retail, hospitality, and accommodation sectors.

This patchy economic performance is something the Reserve Bank of New Zealand will monitor. However, their primary focus remains tackling high inflation.

Nick Goodall (17:18):
It feels like businesses are trying to stay optimistic and maintain production, but consumers are feeling the squeeze of higher fuel costs and mortgage rates. This drop in discretionary spending does not bode well for future economic growth, which has direct implications for the housing market. When the economy is performing well and employment is secure, people feel more confident to buy, sell, or trade property. A stuttering economy prolongs the period of low transaction volumes we discussed earlier.

That wraps up our property and economic discussion for today. Don't forget that our quarterly Cotality webinar takes place tomorrow at eleven o'clock. If you are signed up for our updates, you will receive the registration link to join us live, view the charts, and ask questions.

Before we close, Kelvin, is there anything else on your mind before we move on to our sporting update?

Kelvin Davidson (19:56):
That is everything from me. Let us get into the real interesting stuff!

Nick Goodall (20:00):
Thank you very much for listening to the property market analysis this week. We are moving on to some highly positive news in the sporting world, starting with a brilliant victory for Northland against Otago to secure their first-ever semi-final win and reach the National Provincial Championship final!

Unfortunately, we will be travelling down to Ōtautahi (Christchurch) for the final after Canterbury defeated Taranaki . I spent yesterday afternoon searching for flights and match tickets, and my chat groups are buzzing with excitement. I can confirm I am making a day trip next Monday to support the boys at Te Kaha. Northland has performed incredibly well this season, and despite being labelled as underdogs, we are optimistic they can secure their first-ever National Provincial Championship title.

Turning to the All Blacks, their recent test was a classic game of two halves. Did you manage to watch it, Kelvin?

Kelvin Davidson (21:29):
Yes, I did. The first half was thrilling, but the second half was frustrating with constant television match official interventions, handling errors, and a general lack of flow. Despite a poor second half, securing two victories against Australia is a great result. I do not have any Northland merchandise, but I will be supporting them in spirit next Monday. It is great to see the underdog story succeeding and national trophies being shared around. Go the Taniwha!

Nick Goodall (22:24):
I appreciate the support! The All Blacks match was the reverse of the previous week, where they finished strongly. This time, after a dominant first half, the game ended in a disjointed fashion with the team reduced to thirteen players due to substitution errors and a yellow card. However, we should remain positive about their performance when they put everything together. The team is managing several injuries, and you could compile an incredibly strong starting fifteen from the current injury list. The All Blacks will head to the Northern Hemisphere in a few weeks, which will provide a great test of their squad depth against different styles of play.

I also watched the Kiwis deliver a strong performance against the Kangaroos in the Rugby League World Cup opener, though they were unlucky to miss out on the win. In the netball, the Silver Ferns secured a great victory over the Australian Diamonds, while the White Ferns put up a strong fight against Australia in their T20 match.

Finally, I took the kids to watch the Wellington Phoenix men's team secure a well-deserved two-one victory in the sun yesterday afternoon. While it is a long season ahead, it is a very promising start for a young team.

Kelvin, any final thoughts before we close out?

Kelvin Davidson (26:03):
No, we are enjoying some beautiful spring weather here, and everyone is feeling positive.

Nick Goodall (26:14):
The Kiwis are playing in Ōtautahi (Christchurch) this Sunday, which is why the National Provincial Championship final is scheduled for Monday . I hope to see you in the city on Monday to celebrate a potential victory.

Thank you to Kelvin for your valuable insights, and thank you to all our listeners. Please check the links in our show notes for our latest market reports. If you have any questions regarding property, economics, or sport, please get in touch.

My name is Nick Goodall, this is Kelvin Davidson, and you have been listening to the New Zealand Property Market Podcast. Mā te wā

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