Values Drift -0.4%: Time to Forget the Market Peak?

Kelvin Davidson (00:00):
Yes, buyers have the pricing powers, a lot of listings, but sellers aren't necessarily having to sort of just collapse either.

Nick Goodall (00:14):
Kia ora and welcome to the New Zealand Property Market Podcast, brought to you by Cotality for the 7th of September 2026. I'm Head of Research Nick Goodall, and today I'm joined as per usual by Chief Economist Kelvin Davidson. Kelvin, happy Father's Day for yesterday. Before we hear about how you spent that, how did the release of the August Home Value Index go?

Kelvin Davidson (00:34):
It was pretty good. We had a decent number of journalist calls. From some perspectives, the message won't be that encouraging if you want to see rising house prices. We saw another fall—down 0.4% in August, which was the fifth monthly fall in a row. It reflects that softer period through winter.

Auckland and Wellington continue to look weaker: Wellington was down 0.6% and Auckland was down 0.5%. Christchurch was up 0.1%, which is essentially flat, and Dunedin showed similar resilience. On an annual basis, national values were down 1.0% in August. It is a downward drift rather than a new slump.

Buyers have pricing power with plenty of listings, but sellers aren't collapsing because most people have retained their jobs and can service their mortgages. The upcoming election is keeping a lid on things, and the labour market isn't expected to see meaningful job creation until next year. The market remains in a holding pattern.

Nick Goodall (03:41):
The downward trend is becoming more pronounced on the charts for Auckland and Wellington. In Auckland, values are down a couple of percent over the last year. Conversely, Invercargill is still up 6.5% over the year despite dipping 0.2% in August, while Hastings is down 4.4% annually.

Over the weekend, there was an article in the NZ Herald regarding discounted new apartment developments in Auckland. Looking at the granular data in the Home Value Index by property type, Auckland standalone houses were down 2.2% over the last year, flats were down 3.8%, and apartments were down 7.8%. There is a clear split.

Buyers and businesses are in a waiting period amid election uncertainty and are waiting for economic growth to resume before making major investment decisions. Later this week, we also have the Mapping the Market release coming out, which provides suburb-level granularity.

Kelvin Davidson (08:00):
I've had several questions lately about why we continue to benchmark against the 2021 market peak. It's a somewhat arbitrary comparison. While our index is down 18% from the peak, most of that fall occurred during 2022 and 2023, and values remain 15% above pre-COVID levels.

If you look over the past 10 years, the annual average growth rate across New Zealand has been 3.4% per annum. Smoothing out the boom and subsequent downturn, 3.4% represents a sensible "new normal" for house price growth given structural changes around tax, land supply, and interest rates, compared to historical 6% averages.

Nick Goodall (10:50):
That 10-year benchmark is a great reminder. The Reserve Bank's own projections out to 2029 suggest the market will still be 10% below the 2021 peak eight years later, demonstrating how unusual that boom period was.

Turning to external macroeconomic data, dwelling consents and Q2 building work put in place were released last week. Kelvin, could you walk us through the construction numbers?

Kelvin Davidson (13:02):
Dwelling consents continue to rise. About 3,600 new dwellings were consented in July, up 10% from July 2025. That marks the 12th consecutive year-on-year increase, lifting the annual running total to 41,000—the highest in three years. Growth has been driven by Auckland, Canterbury, and Central Otago.

However, builders who have absorbed higher materials and freight costs under fixed-price contracts may now have to pass those increases on. In a market where existing housing stock is abundant and flat-priced, passing on costs could test buyer appetite and eventually slow consent momentum.

Nick Goodall (15:47):
A healthy level of scepticism is wise, but 41,000 annual consents is much more resilient than anyone anticipated two years ago. Actual residential building work put in place in Q2 was also stronger than expected.

Wrapping up the Reserve Bank's OCR decision from last week, the cash rate was lifted 25 basis points to 2.75%. Reviewing how the major bank economists described the statement:

• ANZ: "Non-committal hiking bias"
• ASB: "Gradualism dominating"
• Westpac: "Appropriately balanced"
• BNZ: "RBNZ takes fright at growth concerns"
• Kiwibank: "A dovish hike"

Where do you land on those summaries, Kelvin?

Kelvin Davidson (20:37):
I align most closely with Westpac's "appropriately balanced." The Reserve Bank is balancing above-target inflation against an economy that is growing slowly. Fixed mortgage rates have barely reacted because this path was already priced in, though floating rates adjusted. The next meeting on 28 October is live and data-dependent, but there is no predetermined path.

Nick Goodall (22:29):
I lean toward BNZ's perspective on tracking growth concerns.

How did Father's Day go for you, Kelvin?

Kelvin Davidson (23:42):
Low-key. I watched the All Blacks test in the morning, and then did a practice session on the rowing machine to prepare for our Gotcha4Life charity fitness fundraiser this Thursday. Topped it off with swim lessons with the family and a few packs of scorched almonds. How about you, Nick?

Nick Goodall (25:21):
Got up at 3:00 AM for the All Blacks. It was tough watching the Springboks wrestle control in the second half to win the series 2-1 in South Africa, but there are positive signs heading into the World Cup cycle.

I went for a 17km run, indulged in some scorched almonds, and watched Northland play. The Taniwha have their second Ranfurly Shield defence this Saturday against Waikato.

A reminder that Cotality is participating in the Gotcha4Life fitness fundraiser this Thursday across Australia, New Zealand, and the US. I'll be sharing a donation link on LinkedIn.

Kelvin Davidson (29:42):
Looking forward to a busy, short week.

Nick Goodall (29:51):
Thanks for your insights, Kelvin, and thanks to everyone for listening. Please subscribe and share your 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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