‘Little chance of runaway house prices’ - Cotality
Thursday, 2 July 2026
House prices nationwide have been on a downward trajectory over the past three months, with weakness widespread across regional markets, which reflects the uncertainty weighing on the market, Cotality says.
The property research company’s latest Home Value Index is out, and it shows the national median price dipped 0.2% to $806,512 in June, pushing the total price drop over the past three months to 0.8%.
The national median was down 0.9% from $815,389 at the same time last year, and 17.5% lower than the market peak of $977,387 in early 2022.
At the same time, total residential mortgage debt was about $399.9 billion in May, up from $377.8b at the same time last year, according to the Reserve Bank’s latest mortgage data. That suggests the country’s equity has fallen with house prices.
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Cotality’s chief property economist, Kelvin Davidson, said if mortgage debt was up but prices were down the residual would be that equity had come down, at least on paper.
But Cotality’s data put the total value of housing stock at $1.67 trillion, and outstanding mortgage debt at $398b, and that meant the aggregate LVR across the housing market was still very low, he said.
“The debt increase is not a big shift, so a bit of equity has been ‘lost’, but for the economy as a whole it is not significant, and nowhere near a disaster scenario.
“These are high level numbers, so at an individual household level it will be a bit different, and in some regions where prices are up people won’t have lost any equity at all.”
If a household was not looking to sell their home a loss in equity was not the end of the world, although negative equity was not good for the mindset, he said.
“Banks won’t come knocking on the door if your equity is down, but they will come knocking if you aren’t paying your mortgage.”
While the national median was down, the fall was modest, and not a surprise as sales had been weakening in recent months, leaving the supply of listings and buyers choice high, Davidson said.
“That in itself restrains prices, but we’ve also had the Iran conflict rumbling on since early March, with associated adverse effects on economic activity, sentiment, inflation, and mortgage rates.
“The peace deal has improved the economic outlook, but the lagged effects of previous uncertainty are pretty clear to see in June’s figures.”
On a regional level, Cotality’s data showed Auckland and Wellington saw house prices fall by 0.5% and 0.4% to medians of $1.04 million and $774,273 respectively in June.
Tauranga’s prices were down 0.2% to $929,649, but prices in Hamilton were up 0.5% to $732,114, while in Christchurch and Dunedin they were up 0.2% to $706,382 and $622,644.
Outside the main centres, prices in some provincial markets that had previously recorded increases remained flat (Rotorua), or saw prices decline, the data showed.
Nelson, Gisborne and Hastings had the biggest price falls, at 1%, 0.6% and 0.5% respectively, and even Queenstown’s median was down 0.3% in June.
Palmerston North was the exception, with a 0.1% increase to a median of $604,104.
Davidson said recent falls in mortgage rates could be good for buyer confidence, but the Reserve Bank would be a key player in how the year panned out, while the Middle East conflict remained a watching brief.
Even if the deal did hold, housing market conditions were tilted in buyers’ favour, with listings still elevated, and that suggested there was little chance of runaway prices any time soon, he said.
“These conditions suggest a continuation of recent, subdued price patterns in the coming months.
“But the marked improvement in housing affordability in the past four to five years is likely to limit any further downside for the market.”
First home buyers continued to fare well in the market conditions, but there were signs investors were growing more cautious as the election - and potential changes in tax policies approached, he added.