New Zealand property sales fall for seventh straight month

New Zealand property sales fell for a seventh straight month in July, with 6,935 deals completed, according to Cotality.

That was down 6.4% from the same month a year earlier.

The latest data points to a housing market in which both buyers and sellers are acting cautiously. Total sales across private and estate agent transactions continued to weaken, pulling the 12-month running total down to 89,385 from a recent high of 91,411 in December.

Even with overall activity soft, first-home buyers increased their share of purchases. They accounted for 29% of July transactions, a new monthly record, and their transaction volumes also continued to rise.

The shift suggests lower competition and softer values are helping some new entrants into the market, even as broader confidence remains restrained. Elevated stock levels have given buyers more room to negotiate, while vendors have so far resisted steep price cuts.

National property values edged down 0.3% in July, Cotality said. The combination of subdued prices and a slower market appears more favourable for first-time buyers than for some other groups.

Kelvin Davidson, Chief Property Economist at Cotality, said the market was being shaped by an unusual balance between buyer leverage and seller resilience.

"Buyers aren't in any rush given the high level of available stock, but sellers aren't capitulating either, given that job losses have been relatively limited. That's keeping property values subdued, down 0.3% nationally in July, which FHBs are benefiting from," Davidson said.

Other parts of the market remain under pressure. Relocating owner-occupiers, described as movers, are still less active than usual as concern over the economy and employment weighs on sentiment.

Mortgaged multiple-property owners recorded a modest increase in market share in July. But Cotality said that gain may prove temporary because landlords and investors are facing flat rents, higher holding costs and political uncertainty linked to the general election.

Davidson said those pressures were leading many participants outside the first-home buyer segment to take a more cautious approach.

"Relocating owner-occupiers, or 'movers', remain less active than normal as economic and job uncertainty weighs on sentiment. Meanwhile, mortgaged multiple-property owners saw a slight uptick in market share in July, but this may be short-lived given the cashflow squeeze from flat rents, rising holding costs, and general election uncertainty," he said.

Rate pressure

The outlook for borrowing costs has added another layer of restraint. The Reserve Bank has started tightening the official cash rate, and expectations of a further increase have begun to feed into mortgage pricing.

Mortgage rates have already moved higher in recent weeks, according to Cotality. Borrowers coming off shorter fixed-rate periods and refinancing into new two-year loans are facing higher costs, while others are seeking longer fixed terms to limit the impact of further rises.

That matters for a market already struggling to regain momentum. Higher mortgage costs can cut purchasing power, discourage discretionary moves and weigh on investor returns, especially when rents are not rising enough to offset the increase in finance and ownership costs.

Davidson said the central bank's stance was likely to remain a headwind for housing activity.

"Adding to market headwinds, the Reserve Bank has commenced a tightening cycle for the official cash rate, with expectations building for another potential increase in September as it looks to reduce future inflation risks," Davidson said.

He said borrowers were already responding to the shift in interest rate expectations.

"Mortgage rates have already drifted higher in recent weeks. While many borrowers are attempting to hedge further rises by taking out longer-term fixed rates, those rolling off shorter fixed terms onto new two-year loans face higher rates. Looking ahead, sales volumes seem poised to keep trending largely sideways or slightly down in the coming months, with mortgage rates now drifting higher," he said.

Subdued market

The July figures reinforce the picture of a market marked by weak turnover rather than sharp price falls. Sales are easing, but limited job losses and seller resistance to discounting have so far prevented a steeper correction in values.

That leaves the market in a holding pattern. Stock remains available, buyers have choice, and first-home buyers are taking a larger slice of a smaller overall market, while more debt-sensitive and confidence-sensitive groups remain hesitant.

"All in all, housing market activity remains subdued, and the second half of 2026 is likely to look quite similar for both sales volumes and property values," Davidson said.