The five things you need to know about the housing market this week.
1. Everybody loves a first-home buyer
The latest Cotality housing figures highlight the continued strength of first-home buyers in the market, as they take advantage of abundant listings, lower house prices, lower mortgage rates, KiwiSaver, and low-deposit lending allowances.
Residential property sales for the first five months of the year reached 36,152, a drop of nearly 5% on the same period last year. But first-home buyers bucked that trend; they completed 230 more transactions between January and May this year than the same period last year, taking them to just over 10,000 purchases for 2026 to date. Their market share also rose, from 25.8% to 27.7%.
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By contrast, activity from relocating owner-occupiers (movers) fell 11% year on year, while purchases by mortgaged multiple property owners, including Mum and Dad investors, dropped by 6%. Alongside the uncertainty stemming from the Iran conflict, I also get a sense that some would-be investors have pulled back because of the election later in the year and concerns about possible property tax policy changes.
2. Mortgage lending is slowing
The latest Reserve Bank mortgage lending figures also reflect the slowdown in the market, with $8.6 billion of activity in May unchanged from the same month last year. This was the first time volumes hadn’t grown since June 2024. Investors have pulled back the most, although that's not due to any particular type of loan (i.e. interest-only, high LVR, and high DTI are all just ticking along).
Looking specifically at first-home buyers, they remain very keen on low-deposit finance, accounting for 71% of all high LVR (>80%; or <20% deposit) loans in May – or put another way, 53% of first-home buyers entered with less than 20% equity last month.
Cotality chief economist Kelvin Davidson: "A resilient economy would bolster the case for a hike. But a range of inflation measures haven’t really spiked either, pointing to no OCR change." Photo / Peter Meecham
3. The economy may be defying the worst fears
Obviously, the US-Iran memorandum of understanding remains a work in progress, but in the meantime, there are signs that the economy isn’t softening as much as might have been feared. For example, last week’s NZ Activity Index – a timely proxy for the benchmark quarterly GDP figures – showed a rise of 2.0% from May last year. That’s a slowdown from the figures of 2.5% or more at the tail end of 2025 and the early part of 2026, but still not bad given the circumstances.
It’s another piece of the curious puzzle faced by the Reserve Bank ahead of next Wednesday’s OCR decision. On one hand, a resilient economy would bolster the case for a hike. But a range of inflation measures haven’t really spiked either, pointing to no OCR change. Either way, borrowers will be cheering recent drops in mortgage rates at some of the banks.
4. Hoping for stable employment
Just a quick look ahead to key data releases this week, Stats NZ will publish May’s filled jobs figures. These numbers are very important to the property market outlook – not to mention general household confidence and resilience – and here’s hoping for a continuation of the relatively stable figures we saw in March and April, despite the Iran conflict.
5. Watching dwelling consents too
On Thursday, we’ll get figures on the number of new dwellings consented in May. There’s been a strong upward trend in recent months, but there are headwinds to consider, not least fuel surcharges for deliveries to building sites (and rising costs for materials themselves), as well as households’ confidence levels having taken a hit lately.
- Kelvin Davidson is chief economist at property insights firm Cotality
