Source: Cotality
New Zealand’s housing market continued to lose momentum in April, with sales volumes falling for a fourth consecutive month as cautious buyer sentiment and rising interest rate expectations kept activity subdued.
Cotality’s NZ Monthly Housing Chart Pack shows sales volumes in April were down -9.0% compared to the same month last year, with activity across the first four months of the year around 5% below the same period in 2025, or approximately 1,500 fewer sales nationally.
Cotality NZ Chief Property Economist Kelvin Davidson said the declines themselves were not especially large, but the persistence of weaker activity indicated a housing market struggling to regain momentum.
“Confidence remains fairly fragile and buyers are taking a cautious approach, particularly with uncertainty around the economic outlook, the inflationary impacts of the Iran conflict, and the potential for higher mortgage rates all weighing on the market,” he said.
National property values remained steady in April, with the Cotality Home Value Index recording a modest 0.1% rise for the month and a 0.6% increase across the three months to April. However, values nationally remain -0.8% lower over the past year and -16.8% below peak levels.
Performance across the main centres continues to vary, with Christchurch and Dunedin still showing relative resilience while Auckland and Wellington remain softer.
“There are still parts of the country where values are edging higher, but overall, the market’s performance is fairly flat,” Mr Davidson said.
“Auckland and Wellington remain subdued with prices well below their record peaks, while some of the more affordable areas are holding up better. At a national level, prices are essentially moving sideways.”
First home buyers still at the fore
First home buyers continue to account for an elevated share of purchases, making up 28.2% of activity in April nationally and more than 30% in Auckland.
Mr Davidson said improved affordability conditions and lower mortgage servicing costs compared to previous years were continuing to support first home buyer demand.
Meanwhile, movers remain less active, accounting for around 26% of purchases so far this year versus their long-run average closer to 28%.
“First home buyers are taking advantage of less competition, lower mortgage rates, access to KiwiSaver, and ongoing low-deposit lending availability. A combination of these factors is helping keep that segment active,” he said.
“Movers seem pretty sensitive to soft economic conditions at present, and that caution is still dominating their purchasing decisions at the moment.”
Rental market still soft
Rental conditions remain soft across much of New Zealand, with Stats NZ data showing rents rose a modest 0.3% over the year to April, having fallen in both February and March
The weakness remains most evident in Auckland and Wellington, where supply has remained elevated and annual rents (MBIE bonds data) were down -2.3% and -4.2% respectively, while markets such as Dunedin (+4.7%) and Christchurch (+2.1%) continue to record growth.
Mr Davidson said rising net migration and a gradual easing in available rental listings suggested rents may not fall too much further from here.
“There are some signs the market may be finding a floor, but rents are still high relative to household incomes, which is likely to remain a handbrake on the strength of any rental upswing over the medium term.”
Borrowers look for longer fixed mortgages
Cotality’s latest Chart of the Month shows a sharp change in borrower behaviour, with more households fixing mortgages for longer periods amid growing expectations that the next move for interest rates may be up.
Reserve Bank figures show that the share of new lending fixed for terms longer than 12 months has climbed back above 50%, after dropping below 10% in late 2024 when borrowers favoured floating or short-term fixes in anticipation of lower mortgage rates. At the same time, the proportion of lending fixed for six to 12 months has fallen from peaks above 60% to below 30%.
Mr Davidson said borrowers appear to be reassessing the outlook for the OCR and preparing for the possibility that inflation pressures could keep mortgage rates elevated for longer.
“Through much of last year, borrowers were keeping terms short because the expectation was that rates would continue falling,” he said.
“But the inflation backdrop has become far more concerning over the past few months, particularly with higher fuel costs and the broader economic effects of the Iran conflict.”
He said borrowers now appeared more focused on securing certainty around repayments as subdued confidence, a fragile labour market, and potential interest rate hikes dampen housing activity.
“If higher fuel and transport costs continue to flow through the economy, there is the risk of inflation staying elevated for longer and mortgage rates remaining higher too,” he said.
“Buyers still have a reasonable amount of negotiating power and the market remains broadly balanced overall. Until confidence improves, it’s hard to see a strong lift in sales volumes or prices in the short term.”