The five things you need to know about the housing market this week.
1. The Reserve Bank isn’t rushing
The Reserve Bank lifted the Official Cash Rate to 2.75% last week, as was widely expected. Moving the OCR closer to a neutral mark of around 3% seems prudent, given that inflation is too high and there are signs of better economic growth. It was a unanimous decision, with the associated commentary pointing to further OCR rises to come. But reading between the lines, the tone suggested that the next rise may not necessarily be on October 28 if the incoming data has a softer flavour.
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For the housing market, there was nothing much to alter the broad expectation that sales and property values are unlikely to budge. The mood amongst buyers and sellers certainly remains cautious, and those with mortgages will be wary of the recent interest rate increases on popular terms such as the two-year fix. That said, it's likely the OCR lift has already been baked into fixed rates.
2. Property values remain subdued
It’s no surprise property values are sluggish in many parts of the country. The Cotality Home Value Index for August showed a 0.4% monthly drop in the nationwide median value, and a 0.5% drop in Auckland's median value and a 0.6% drop in Wellington's.
Christchurch, Hamilton, and Dunedin values were a little more resilient, but when you broaden out a bit, the numbers suggest a downward drift for values rather than a continued slump. Indeed, the national median is only 1% lower than a year ago. One reason is that sellers don't feel the need to capitulate to buyers, who have a lot of the pricing power on paper, given the abundance of listings on the market. This is because most people have kept their jobs, and the unemployment rate has largely gone up due to more available workers rather than lay-offs.
Cotality chief economist Kelvin Davidson: "Investors will be wary of potential tax policy changes." Photo / Peter Meecham
But even though affordability has significantly improved, it’s still difficult to see a widespread upturn for property values anytime soon – especially with the election now firmly on the radar. Investors will be wary of potential tax policy changes.
3. Another solid month for new dwelling consents
Stats NZ reported 3579 new dwellings were consented in July, up by 10% from the same month in 2025 and the 12th consecutive rise. The annual running total has now risen to a touch more than 40,900, the highest for nearly three years. Less of a positive is the fact that builders are having to pass on more of their input cost increases – such as fuel surcharges for site deliveries – to the end customer, which won’t be easy in an environment where overall property values are relatively flat or falling. Ultimately, it may mean that fewer households decide on a new-build project and no further rises in dwelling consents.
4. Pricing brings people shorter again
Last week’s RBNZ mortgage data showed a lift in new lending on shorter fixed terms of 6-12 months and a commensurate drop in activity beyond 12 months (although the two-year fix itself was still fairly popular). I had been wondering if this might happen, given that longer-term fixed rates have recently risen relative to the shorter terms. In other words, borrowers seem to be reacting to the pricing – the relatively lowest rates now are the shorter fixes, even if there’s a risk that in six months or a year the borrower has to reprice at an even higher mortgage rate.
5. First home buyers still ruling the roost?
And finally, just a quick look ahead to the Cotality Buyer Classification figures for August, due this week. Recently, first-home buyers have been going from one record share of activity to another (e.g. 29% in July), and more strength in August seems pretty likely.
- Kelvin Davidson is chief economist at property insights firm Cotality
