The drift lower continues for property sales

Kelvin Davidson (00:00):
At 90,000, it's still not terrible. But there is still that downwards drift, as I say, seven falls in a row.

Nick Goodall (00:13):
Kia ora and welcome to the New Zealand Property Market Podcast, brought to you by Cotality for the 31st of August 2026. I'm Head of Research Nick Goodall, and today I'm joined as per usual by Chief Economist Kelvin Davidson. Kelvin, I'm coming to you just outside of Hamilton as I make my way home from the successful Ranfurly Shield defence yesterday. But I couldn't not get the podcast done, so here we are. The main release out last week was the monthly Chart Pack, and we focused on sales volumes. What's the gist, mate?

Kelvin Davidson (00:46):
More of the same, in some ways. We've seen another soft sales volume month—about 6,900 transactions across the country in July, which was down about 6% from the same month in 2025. That is the seventh fall in a row when looking year-on-year across each month so far this year. Over the last 12 months, we've had around 89,000 to 90,000 sales. At the start of the year, we anticipated maybe 100,000 for the calendar year, so we've probably lost some sales compared to where we would have been if geopolitical tensions hadn't emerged and mortgage rates had stayed down.

At 90,000, it's not terrible, but there is that continued downward drift. There is caution from both buyers and sellers. Buyers aren't rushing because there are lots of listings and they have choice and pricing power. At the same time, sellers aren't collapsing either; mortgage holders have largely retained their jobs, so the rise in unemployment has come through labour supply rather than outright job losses.

Within that, first-home buyers are definitely taking advantage. They had a 29% market share in July, which is a record high for a single month. They are genuinely raising their transaction volumes and cashing in on low-deposit lending allowances.

Looking ahead, it's difficult to see this turning around quickly. The election is coming onto the radar, global uncertainty continues, and mortgage rates have edged up slightly. Regionally, the drift lower is universal across the main centres. Dunedin had slight growth year-on-year, but the rest of the main centres and provincial markets are down 5% to 10%.

Nick Goodall (04:43):
It is a tougher time out there. Hamilton was down about 11%, showing the sharpest slowdown among the main centres. The Chart Pack has all the buyer classification series and regional data, so it's well worth checking out.

The other major event this week is the Monetary Policy Statement and OCR decision on Wednesday. Macroeconomic releases last week included the New Zealand Activity Index, consumer confidence, and filled jobs data. Could you run through that and give us an OCR preview?

Kelvin Davidson (06:02):
You start to get a sense that things might be picking up slightly, though it's nothing to get carried away with. ANZ Business Confidence for August held on, showing people are adjusting. The New Zealand Activity Index for July was up 2.6% year-on-year—growth slowed from 3.0% in June, but 2.6% is close to long-run averages. Filled jobs rose 0.3% in July, reinforcing that unemployment is rising due to labour supply growth rather than net job destruction.

Combining modest economic resilience with inflation that remains above target, there is no real impediment stopping the Reserve Bank from raising the OCR. The Reserve Bank has indicated a desire to get the cash rate back to a neutral level around 3.00% to preempt potential second-round inflation pressures. A 25 basis point increase on Wednesday seems like the "least regrets" option.

Because it's a full Monetary Policy Statement, the focus will be on their updated forecasts for GDP, inflation, and the forward OCR track—specifically whether they signal another hike in October before the election or pause until December. Fixed mortgage rates have largely priced this in already, so we may not see a large reaction in longer-term rates, whereas floating rates will adjust.

Nick Goodall (11:02):
There is nothing in the recent data to derail their stated path to neutral. I expect the 25 basis point increase on Wednesday as well. A 50 basis point hike seems unlikely given their desire to avoid undue volatility.

Looking ahead, the Home Value Index will be released this Friday. Based on the weekly indicative index, Auckland and Wellington continue to slide slightly lower while Christchurch is flat at best, pointing to a flat-to-soft national result.

How was your weekend, Kelvin?

Kelvin Davidson (14:24):
A very quiet weekend in Canterbury doing painting, lawn mowing, and gardening. It felt like spring before the hail returned. My weekend pales in comparison to yours.

Nick Goodall (14:44):
I drove up to Hamilton on Saturday, switched cars with a mate, and drove to Whangārei. We watched the All Blacks game in the middle of the night at my dad's house. The All Blacks lost a tight match to the Springboks, who were far more clinical at the set piece and breakdown. That ties the series 1-1 heading into the third Test in Soweto.

On Sunday, we went to the stadium in Whangārei and watched the Taniwha successfully defend the Ranfurly Shield against Tasman in a tense 10-10 match that ended in victory. It was an incredible atmosphere. We met the team at the pub afterwards and got photos with Rob Rush and Rivez Reihana. After years of tough results for Northland, it's awesome to see the Shield defended.

Kelvin Davidson (19:55):
It's fantastic to see the Shield in unions that haven't held it for decades. What an experience.

Nick Goodall (20:19):
Definitely made the most of the 48 hours. Any closing thoughts before we wrap up?

Kelvin Davidson (20:30):
Just keep an eye out for the OCR decision on Wednesday and the Home Value Index on Friday.

Nick Goodall (20:36):
Thanks very much for your insights, Kelvin. 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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