Property market in holding pattern ahead of OCR call
Wednesday, 18 February 2026
With the Reserve Bank expected to hold steady on the cash rate today, the property market has had a subdued start to the year with flat prices and sales easing off.
Cotality’s February housing park had national median property values falling 0.3% over the three months to January.
Cotality NZ chief property economist Kelvin Davidson said the market had started this year in a subdued fashion with little movement in prices and lower sales transactions despite improved affordability, more favourable mortgage rates and a gradually strengthening economy.
Auckland and Wellington continued to underperform, while Dunedin and Invercargill were more resilient in January. Parts of Canterbury also remained relatively stronger than other areas.
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He said the flat performance may disappoint some vendors but offered improved opportunities for buyers.
“The predictability of current conditions is reassuring for buyers, who are continuing to adjust to the recent experience of stable prices and lower mortgage rates,” he said.
With affordability gradually improving and employment conditions set to strengthen slowly this year, there’s a growing sense of optimism, even if the recovery will be measured rather than sharp, Davidson said.
Sales volumes in January, measured across both private transactions and real estate agents, were 10.7% below the same month in 2025. It marked only the third monthly fall in the past 33 months.
Davidson said he was not overly concerned about the softer start, because there’s a suspicion that some deals may have been rushed through into December (which saw strong growth), artificially subduing the figures for January.
“If you take December and January together, the upwards trend remained in place. We’d expect to see more sales growth activity in 2026 on the back of reduced mortgage rates and a recovering economy,” he said.
First-home buyers’ market share dipped to 26.2% in January, down from 28.3% in the December quarter, although the overall number of purchases remained firm.
“This was a slightly smaller share of a bigger pie,” Davidson said.
Mortgaged multiple property owners, including so-called “mum and dad” investors, continued to feature steadily in the market, supported by lower interest rates and reduced cashflow top-ups on rentals.
There were also early signs of more activity from owner-occupiers looking to relocate, although Davidson said it was too soon to call it a trend.
He said the movers’ market share lifted from 25.3% in last quarter to 27.0%.
“To be fair, it’s early days. But this could be the first sign that as economic confidence starts to recover more owner-occupying households may start to look at the market again and relocate. Their activity has been quieter than normal lately, so some pent-up demand to shift is probably present.”
The rental market has also softened as net migration had fallen sharply and the number of available rental properties remained up.
Ministry of Business, Innovation and Employment bonds data showed the median national rent in the three months to December was 0.8% lower than the same period a year earlier.
Wellington recorded one of the largest annual shifts, with median rents down about 10% to $582 per week.
Hamilton and Tauranga also saw declines, while Auckland edged slightly lower. Christchurch and Dunedin recorded modest growth.
“Rents rose quickly when migration was surging and supply was tight. Now there are more listings, population growth has slowed, and tenants simply don’t have the capacity to keep absorbing large increases,” Davidson said.
He said a sharp rebound in rents appeared unlikely, with the more probable path being a period of flat or very modest growth as the market adjusted.
With mortgage rates eased and affordability at its best level in several years, Davidson said 2026 was likely to bring gradual growth in both sales and prices rather than a sharp rebound.
“Affordability has improved, mortgage rates have eased, and listings are gradually drifting lower. Those factors combined are helping to steady the market and should support a lift in sales activity through 2026,” he said.
Davidson said evidence of price pressures was seen across many parts of the economy, which will be a concern for the Reserve Bank.
He said an eventual increase in interest rates was still not imminent and more likely later in the year or in 2027.