The five things you need to know about the housing market this week.
1. Property sales continue to slide
Anybody deriving revenue from property market activity is having a testing time at the moment, with agreed sales, across estate agents and private deals, falling again in August – down by nearly 12% from the same month a year ago, the eighth fall in a row (meaning every month so far this year has been a drop). In fact, apart from 2022, this was the lowest August sales figure since 2011. The reasons are pretty obvious: economic uncertainty, rising mortgage rates, and some election/political wariness.
That being said, August’s figures do look a bit softer than might have been expected, so there could just be a "one-off" timing issue in here, meaning that September may well turn out to be a little stronger than might be anticipated (although I wouldn’t necessarily hang my hat on that). The annual running total is still above 89,000, which isn’t a disaster. Still, the bottom line is that activity faces a few challenges right now.
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2. Movers aren’t moving
Underpinning the slowdown in sales has been caution from relocating owner-occupiers, or movers, who are currently choosing to stay put more often than usual. Sometimes, movers may be stuck where they are due to a lack of suitable choice. But this is not the case right now, given that available listings are abundant. Instead, their relative lack of activity is likely related to the sluggish economic backdrop and reduced job security, as well as perhaps less confidence they’ll get a price they want (even if the next house they buy may also come cheaper, too).
Looking ahead, a more pronounced comeback by movers may not be on the cards for a while yet either, with economic growth not really anticipated to strengthen on a sustained basis until perhaps the middle or second half of next year.
3. Q2 GDP data was good, but caution remains
On that note, we got the Q2 GDP data last week from Stats NZ and, at face value, a 0.2% rise in economic output was respectable for the April-June period, given the uncertainty in the global economy. Construction was decent, as was manufacturing and wholesaling. On the other hand, transport and hospitality were softer, which is not surprising given higher fuel costs.
Cotality chief economist Kelvin Davidson: "Sometimes, movers may be stuck where they are due to a lack of suitable choice. But this is not the case right now, given that available listings are abundant." Photo / Peter Meecham
But the 0.2% lift still suggests a relatively subdued economy, with spare capacity lingering, which would tend to bring down inflation over the medium term. In that context, the GDP data on its own may not necessarily raise the chances of an OCR rise on October 28. However, other economic indicators have looked better, and fuel prices have risen sharply again. Perhaps the best we can say right now is that an OCR rise next month shouldn’t be ruled out altogether (having previously looked less likely).
4. Net migration is still rising but from a low base
Meanwhile, last week’s Stats NZ figures showed a net migration inflow to NZ of 20,351 people in the year to July (albeit subject to later revisions), up from the trough of 9230 in August last year and the highest figure since December 2024’s 23,747. Of course, the net migration tally remains relatively low by past standards, and there is no evidence it is putting pressure on property values or rents.
5. A further slowdown for mortgage lending?
After a flurry of important data last week, the next few days are quieter again, but my focus will be the RBNZ’s mortgage lending stats for August on Thursday. A slowdown in overall lending volumes showed up fairly clearly in July’s figures and another soft figure for August would not be a surprise. The breakdowns are always intriguing too, with bank switching/refi recently showing lingering resilience (although not as strong as before), and the loan-to-value and debt-to-income ratio rules not really binding at present.
- Kelvin Davidson is chief economist at property insights firm Cotality
