Figures measured across agent-led and private sale transactions show there were just 4,744 deals done in June; that’s 22.1 per cent down from the same time last year and breaks the consecutive run of growth since April 2023 (-9.6 per cent).

In contrast, total stock on the market is currently more than 20 per cent above the same time last year.

CoreLogic’s Chief Property Economist, Kelvin Davidson, says with listings on the market high, the sluggishness of sales is driven by cautious or restrained buyer demand, not a lack of choice.

“It would appear some pent-up reluctance by sellers to list in the final few months of last year is now coming forward and turning into available stock this year. That’s creating more choice for buyers and feeding into weaker price pressures.

“Even that reduced pool of buyers with the finance, and who can afford seven per cent mortgage rates, seem to be taking their time and are seemingly being selective on finding the right property,” he says.

However, first home buyers (FHBs) show no sign of pulling back, with their activity continuing to hover at record highs, especially in Auckland (27 per cent) and Christchurch (29 per cent).

First home buyers just keep rolling on, with their market share holding firm nationally at 26 per cent, Davidson says.

“It’s never easy to buy that first home, but at the moment that group is enjoying lower house prices than at the peak, less competition from other buyer groups, as well as other supports such as access to KiwiSaver for the deposit.”
He says given the recent loosening in loan-to-value ratio rules, it will be interesting to see whether that adds an extra boost to FHB activity, who are already making full use of the banks’ low deposit lending allowances.

The other big change in recent weeks has been the easing inflation environment and stronger indications from the Reserve Bank that official cash rate cuts could be seen before the end of the year.

“In other words, there’s light emerging at the end of the mortgage rate tunnel for cash-strapped borrowers.”

Subdued market

Meanwhile, despite a raft of housing policy changes this month, home values continue to drop.

CoreLogic's House Price Index fell 0.5 per cent last month, taking the quarterly change to -0.8 per cent. The month-on-month decline was the largest drop in prices since June last year and continues a trend of minor falls seen in recent months.

Over the past 12 months to June, NZ house prices are up 1.8 per cent, equating to a $16,000 boost in homeowner wealth.

The annual rise reflects the earlier but temporary 3.2 per cent rise in prices between September last year and March this year. That previous momentum stalled as high mortgage interest rates continue to restrict housing credit demand.

Each of the main centres recorded flat to falling prices over the month, with Christchurch and Dunedin experiencing no change in June, the best performers.

‘Dead cat bounce’

CoreLogic research head Nick Goodall says the last 12 months could be described as a dead cat bounce, with confidence perhaps misjudging the trajectory for mortgage interest rates.

"Inflation has remained sticky, particularly domestically, as the RBNZ has stayed true to its commitment of using monetary policy to bring consumer prices under control.”

Goodall says the latest lending figures from RBNZ show a further evolution in the mix of lending for different purposes.

"In May, 24 per cent of new residential mortgage lending was from borrowers changing bank loan providers. This is the second largest share on record, below only March 2023, when 26 per cent of new mortgage lending was associated with refinancers switching banks. The two-year average is 20 per cent and in December last year the share was as low as 18 per cent.

"This change illustrates the persistent low levels of real estate transactions as a source of new mortgages for banks. With such a competitive lending environment, it's no surprise to see borrowers seeking out the best deal as lenders work hard to retain borrowers and attract new customers away from their competitors," he says.