NZ Property Movers Drop to 24.2% as Reserve Bank Weighs 3.00% OCR Hike

Nick Goodall (00:07):
Kia ora and welcome to the New Zealand Property Market Podcast, brought to you by Cotality for the 27th of October 2026. I'm Head of Research Nick Goodall, and I'm joined today, as per usual, by our Chief Economist Kelvin Davidson. Kelvin, we have a Reserve Bank Official Cash Rate (OCR) decision to preview shortly. But first, the October Housing Chart Pack was released last week, and you led with the total value of New Zealand residential property as an asset class. Could you take us through the details of that release and any other important insights from the Chart Pack?

Kelvin Davidson (00:37):
We have been looking for fresh ways to contextualise the property market each month beyond repeating that sales and prices are trending sideways. At the start of the Housing Chart Pack, we always provide a snapshot of the overall size and composition of the New Zealand housing market.

Currently, Cotality values the total residential dwelling stock in New Zealand at approximately $1.66 trillion across 1.74 million dwellings. Alongside that, the Reserve Bank of New Zealand (RBNZ) measures residential mortgage debt at $404 billion. Combining those two figures means there is $1.26 trillion of household equity in the New Zealand housing market, which equates to a whole-market loan-to-value ratio (LVR) of 24%. While there is substantial debt concentrated among mortgaged households—meaning interest rate rises hit those specific borrowers hard—there is also a massive equity buffer across the market as a whole. Over the past 12 months, approximately $78 billion worth of residential sales have been completed, which gives a clear picture of total market turnover.

Every three years, Stats NZ also estimates the composition of household wealth. As at mid-2024, Stats NZ estimated that residential housing accounted for 48% of total household assets—roughly half of household wealth. Given that house prices have been relatively flat or drifting lower in several regions since 2024 while KiwiSaver balances and share markets have risen, that 48% share has likely edged down slightly.

Looking ahead over the next 10 to 20 years, as the market adjusts to expectations of lower long-term capital growth rates in property, households may increasingly diversify into other financial asset classes. That 48% figure from 2024 could potentially represent a cyclical or structural peak in housing's share of total household wealth, though residential property clearly remains a cornerstone asset for New Zealanders.

Nick Goodall (05:42):
It is also useful to compare those wealth figures across the Tasman, as our Australian Chart Pack tracks similar metrics alongside superannuation and commercial property.

Looking at the September Buyer Classification data in the Chart Pack—and saving our detailed first-home buyer discussion for next week following Friday's release of our co-branded Westpac First-Home Buyer Report and your upcoming podcast with Satish Ranchhod—what stood out to me was the pullback in relocating owner-occupiers (movers).

In Q3 2026, movers dropped to near all-time lows of 24.2% of national transactions, approaching the troughs recorded during the Global Financial Crisis (GFC) when credit markets froze and unemployment rose. This mover slowdown is occurring across all the main centres: Auckland has dropped below 20% of sales going to movers, Wellington is down to 18%, and Hamilton and Christchurch are similarly subdued. With the upcoming general election and subsequent coalition negotiations adding uncertainty, existing homeowners are delaying major moving decisions.

Meanwhile, mortgaged multiple property owners (investors) recorded a minor bounce to 22.9% of sales in Q3, up slightly from the previous quarter but still well below earlier levels as investors navigate high operating costs, flat rents, and election uncertainty. Did anything else stand out to you in the Buyer Classification numbers, Kelvin?

Kelvin Davidson (08:33):
That mover trend is really striking. Historically, between the GFC and the post-COVID period, movers consistently accounted for 28% to 30% of national transactions. We know there is a strong correlation between mover market share and GDP growth. While some homeowners are reluctant to sell for less than they might have achieved a few years ago, the primary driver is the economic cycle and job security concerns.

What makes this fascinating is the flow-on effect for housing supply. When movers stay put, they effectively clog up the housing chain because their existing homes are not coming onto the market for someone else to buy. Yet, first-home buyers are still purchasing in high volumes. Where is that stock coming from? First-home buyers are heavily purchasing newly built properties, and they are also buying existing stock from property investors who are rationalising their portfolios, alongside properties freed up by older owners moving into retirement villages. We are currently working on seller classification data behind the scenes to map that exact flow of housing stock.

Nick Goodall (11:06):
Once economic confidence and job security improve—which Reserve Bank GDP forecasts suggest should build from this quarter into 2027—returning movers should help unlock the market by listing their existing homes and trading up or down.

Turning to the macroeconomic data released last week, we received the Q3 Consumer Price Index (CPI) inflation figures from Stats NZ. Could you walk us through the numbers and how they set up tomorrow afternoon's Reserve Bank Official Cash Rate (OCR) decision?

Kelvin Davidson (12:08):
Headline annual CPI inflation slowed from 4.1% in Q2 to 3.7% in Q3 2026. At face value, a slowdown is positive, but there are important caveats. The reduction was driven primarily by imported tradable inflation (such as fuel and food), which fell from 4.9% in Q2 to 4.3% in Q3. In contrast, domestic non-tradable inflation (such as rents and local services) edged down by only 0.1 percentage points, from 3.4% to 3.3%.

Unfortunately, the dip in tradable inflation looks temporary. Late September and October have already seen global fuel prices rise again due to renewed tensions in the Middle East, which will feed directly into Q4 inflation. Furthermore, underlying measures of core inflation—such as trimmed means and weighted medians—remain elevated, and headline inflation at 3.7% is still well above the Reserve Bank's 1% to 3% target band.

Because monetary policy operates with a lag, the Reserve Bank's primary concern is preventing high headline inflation from becoming embedded in business pricing and wage negotiations—known as second-round inflation. While the RBNZ signalled a data-dependent approach at the last Monetary Policy Statement, sticky core pressures and rising Q4 fuel costs have built a strong consensus that the Reserve Bank will raise the OCR tomorrow afternoon, potentially followed by another increase in December to return the cash rate to a neutral level. How much of that passes through to retail mortgage rates remains to be seen, as wholesale markets have priced much of this in, though the 6-to-12-month risk for mortgage rates remains tilted slightly upward.

Nick Goodall (16:09):
It was surprising to see some bank economists already forecasting Q4 annual inflation to rebound to 4.5% just one month into the quarter, largely off the back of petrol prices. Looking across the bank economics teams, expectations for the terminal or neutral OCR currently range from 3.25% up to 4.00%. Even Kiwibank's economics team—who previously argued further hikes weren't needed—suggested that if the RBNZ wants to reach 3.00%, they will likely "rip the band-aid off" and hike tomorrow. Market odds now sit at an 80% to 90% chance of an increase tomorrow.

However, playing devil's advocate, there is a coherent case for pausing until December. One core inflation measure is already sitting at 2.7% (inside the 1%–3% target band), and there is very little evidence of second-round wage breakouts. Furthermore, the RBNZ cannot control global oil prices; when we had a temporary ceasefire in the Middle East a couple of months ago, petrol prices fell rapidly, and both Reserve Bank and Treasury forecasts project tradable inflation to drop sharply over the next three to six months. Meanwhile, the tightening from the previous two OCR hikes is still working through the system—borrowers rolling off one-year fixed rates are now refixing onto higher mortgage rates, which directly curtails household spending. Waiting until December would allow the RBNZ to observe more of that dampening effect. How do you weigh up those conflicting forces, Kelvin?

Kelvin Davidson (21:05):
Part of the projected Q4 inflation jump could be driven by unfavourable base effects from a softer Q4 result a year ago, alongside current fuel spikes. On the wage side, I agree that second-round wage pressures face a natural ceiling right now because unemployment is above average and there is an excess pool of available workers.

However, the counter-risk is business profit margins. Firms have absorbed cost increases and squeezed their margins for a long time. Even if the Middle East conflict resolved and fuel prices dropped, businesses might use that breathing room to rebuild their margins by raising retail prices. Ultimately, it comes down to central bank credibility: with headline inflation running above the 1%–3% target band, the Reserve Bank cannot afford the perception that it is letting inflation drift. That is why a hike tomorrow looks like the most probable outcome.

Nick Goodall (24:26):
We will not be recording a special reactionary episode tomorrow, so we will review the OCR decision and any voting split or forward guidance for December on next Monday's podcast. Since tomorrow is a Monetary Policy Review rather than a full Monetary Policy Statement, we won't receive the full spreadsheet of updated economic forecasts, but under the current Governor's tenure we still get detailed committee commentary.

Also coming out this week—to media on Thursday and to the public on Friday—is our co-branded Westpac Cotality First-Home Buyer Report, featuring Westpac's internal data on first-home buyer ages and average LVRs alongside commentary from Satish Ranchhod. We will unpack that report in detail on Monday.

Turning to the weekend's sport, my day trip to Christchurch yesterday for the NPC Final turned into an overnight stay after our 8:45 PM flight flew all the way to Wellington, couldn't land due to the weather, and turned back to Christchurch!

At Te Kaha Stadium, Northland led Canterbury 21–10 at half-time and looked fantastic. Unfortunately, an early second-half sin-binning swung the momentum, and Canterbury strangled the second half to win back-to-back titles. Even so, Te Kaha Stadium was incredible—warm, loud, and brilliantly located—and the travelling Northland fans drank the local pub completely dry of Lion Red kegs within two hours!

Kelvin Davidson (29:23):
I was on the Taniwha bandwagon too—I even went into the bottle store chiller with the kids on Monday morning to buy Lion Red for the match. Northland had a massive season, holding the Ranfurly Shield and making the final.

Nick Goodall (30:02):
In other sports, the Silver Ferns wrapped up the Constellation Cup 3–0 against Australia, and I was at Wellington Regional Stadium on Sunday in the sunshine to watch a young Wellington Phoenix side beat Melbourne Victory 2–1 to go top of the A-League after two rounds. How was the rest of your long weekend in Canterbury, Kelvin?

Kelvin Davidson (31:57):
I played golf on Sunday morning before taking over parenting duties while my wife went away to Banks Peninsula with friends. Then, with the nor'west wind blowing, I heard cricket appeals over my back fence from the Lincoln cricket ground. I wandered over and discovered New Zealand A playing India A! New Zealand A were cruising at 130 without loss when I arrived, and promptly lost three wickets in 15 minutes with just me and a dog watching on the bank.

Nick Goodall (33:34):
Hard to beat having international cricket right over your back fence! That wraps us up for this week. Thank you for your insights as always, Kelvin, and thank you 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.