First home buyers are holding their ground in a subdued housing market, new data suggests — making up nearly a third of Auckland purchases even as national sales volumes fell for a second consecutive month.
New monthly Cotality data released this morning showed New Zealand's housing market has recorded back-to-back monthly sales declines for the first time in nearly three years.
Sales volumes in February fell 6.8% compared with the same month last year, following a 7.8% drop in January, with buyers reluctant despite cheaper rates for borrowing.
It marked the first consecutive monthly decline since April 2023.
Property values remained stable, with the national median rising 0.2% in February, although values were still 1.2% lower than a year ago and about 17.3% below the early-2022 peak.
Cotality chief property economist Kelvin Davidson said sales volume was fairly sluggish.
He suggested the market was "still rebuilding" but "confidence takes time".
The property economist also noted unusually strong activity in December may have skewed the latest figures, suggesting the softness could partly reflect timing rather than a new downward trend.
"But even allowing for that, the housing market is still in a phase where buyers are taking their time."
Some regional markets bucked the trend, with Hamilton and Dunedin each recording a 0.9% rise in values in February. Invercargill also moved higher.
Rise of the first home buyer continues
First home buyers continued to be a major force in the market, accounting for around 27% of property purchases across January and February combined.
In Auckland, first home buyers had taken an even larger share at about 30% so far this year, helped by improving affordability in the country's most expensive market, Davidson said.
"KiwiSaver withdrawals continue to play a role in helping buyers assemble deposits, while the banks' low-deposit lending allowances are also supporting access to credit," he said.
In some cases, mortgage repayments had become comparable to or cheaper than rents, which Davidson said could encourage tenants to shift from renting to buying if they could access a deposit.
Movers accounted for just over 26% of purchases over the first two months of the year, while mortgaged multiple property owners held a 24% share.
Davidson said the behaviour of owner-occupiers trading homes would be an important factor to watch through 2026, noting when the group became more active, it tended to support higher transaction levels across the entire market.
Rents falling in parts of the country
In good news for renter affordability, market conditions remained "soft" with net migration well below previous peaks and listings still elevated, according to Cotality.
MBIE bonds data showed the median national rent fell 0.8% in the three months to January compared with the same period the year before – a "relatively rare outcome after several years of strong growth".
Davidson said rents had already risen significantly in recent years and wage growth had eased, limiting the scope for further increases.
"Rents have already risen significantly in recent years, and wage growth has eased, so there isn’t a lot of scope for further increases at the moment. More likely we’ll see a period of flat or only modest rental growth while the market adjusts.”
Uncertainty looms with 59% of mortgages up for repricing
Around 59% of existing mortgages by value were due to be repriced over the next 12 months, which could provide some relief for house owners moving onto lower rates.
However, Davidson flagged global uncertainty, including the Iranian war and higher fuel prices, as potential inflation risks which could flow through to interest rates.
"If those pressures prove temporary, the Reserve Bank should still be able to hold the OCR steady," he said.
"That would allow the housing market to gradually rebuild momentum, although any recovery in prices and sales volumes is likely to remain modest rather than rapid."
Today's newly released data comes from Cotality, formerly known as CoreLogic. It is one of a number of property data purveyors in New Zealand, with REINZ, Trade Me Property, realestate.co.nz, and others also publishing regular housing market reports.
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