The triple threat keeping NZ property investors on the sideline
Thursday, 23 July 2026
Property investors are becoming increasingly cautious ahead of the election, adding another bump in a housing market economists say is still searching for a reason to recover.
The housing market was still firmly in buyers’ favour with sales activity continuing to weaken and property values showing little sign of a broad-based recovery.
Cotality NZ’s monthly housing pack said there were 6829 residential property sales across New Zealand in June, down 4.0% compared with the same month last year - the sixth consecutive monthly decline in transaction volumes.
Over the first six months of 2026, sales activity was 4.2% lower than the same time in 2025.
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Cotality’s chief property economist Kelvin Davidson said elevated listing numbers meant buyers still had plenty of choice and were able to negotiate harder than they had for some time.
“The balance of power has shifted. Buyers have options, time on their side, and in many cases the ability to negotiate harder than we've seen for several years,” he said.
New listings always reached a seasonal low in June and July but recently the weekly flow of properties had been a bit lower than normal.
“This might be related to the Iran conflict, and could indicate a dulling of housing market confidence, as well as reduced willingness of vendors to bring their properties forward for sale.”
Davidson said investor demand had weakened for a second consecutive quarter, with mortgaged multiple-property owners accounting for 22.5% of purchases in the June quarter, down from 24.3% at the end of last year.
Investors were facing a combination of subdued rental growth, rising ownership costs such as council rates, and growing political uncertainty ahead of the election, he said.
“A potential capital gains tax is a concern for investors. But many are perhaps even more worried about the risk of interest deductibility being phased out again.”
He said some investors were also beginning to question whether house prices would continue to deliver the same long-term capital gains as they had in previous decades, particularly as new housing supply remained relatively strong.
While investors pulled back, first-home buyers continued to increase their share of the market, accounting for a record 28.3% of purchases in the June quarter.
“Property values remain sluggish in key markets such as Auckland and Wellington, whereas some other main centres such as Christchurch continue to rise gradually, alongside a number of regional areas,” he said.
Davidson said many first-home buyers were making use of KiwiSaver withdrawals and low-deposit lending, while some found mortgage repayments compared favourably with paying rent.
The broader market remained subdued, with economic uncertainty continuing to weigh on confidence.
Davidson said recent geopolitical tensions, including renewed instability involving Iran, may also have made some homeowners less willing to list their properties, although new listings had only been slightly weaker than normal for the time of year.
He said there was still no obvious catalyst for a strong recovery in the housing market.
'As a result, the second half of 2026 is likely to look similar to the first, with modest sales activity and generally flat property values across much of the country.'