Another flat month for property values and uncertainty is still high
The Cotality Home Value Index showed a -0.2% fall at the national level in June – yes, technically a drop, but fairly modest. More broadly, it was a continuation of the flat market we’ve seen throughout 2026 so far. For a while, it looked as if the US-Iran peace deal was holding and mortgage rates had dropped. But this is now much less certain and the rest of 2026 could be soft for housing.
A tale of two trends
Just digging a little deeper below the surface, the flat national trend masks some slight divergences across the country. Auckland and Wellington, for example, have seen property values continue to drift a bit lower, while other main centres such as Christchurch and Hamilton are still edging upwards.
It wouldn’t be a surprise if small falls in June in previously-resilient markets such as Invercargill and Queenstown prove to be temporary blips – although they’re still reminders of the caution that’s currently out there, in a market with plenty of listings and pricing power in buyers’ hands.
A broken peace deal
Clearly a healthy dose of caution is required when it comes to global politics right now and, as it’s turned out, the initial US-Iran peace deal hasn’t lasted. We had previously seen mortgage rates drop a bit as inflation fears eased, but if anything, the risks here now appear to be back to the upside. Indeed, fuel prices have lifted again, and inflation concerns are rising.
A lasting peace deal may have created the conditions for better economic growth and some job creation, which would have pointed to a bit of headroom for increases in property sales (and lending) and values. Granted, a new peace deal could emerge anytime. But for now, caution is warranted.
And watch for a higher OCR over the medium term
In addition, the RBNZ has already raised the OCR once from 2.25% to 2.50%, and the scope for further increases back towards a more neutral level of around 3% over the coming months would also tend to limit the housing market to some extent.
In addition, the unemployment rate remains above average, and I also detect there’s been a mindset shift in our housing market too – with more people starting to question the belief that values will also rise at consistent rates of 6% or so. Reduced capital growth expectations would tend to become self-reinforcing, by dampening buyer demand in the first place. (As an aside, lower capital growth rates would also tend to reduce the tax take to a Labour-led government from any CGT system in 2027.)
With housing affordability looking much better, this limits the scope for further significant house price falls. But strong gains don’t seem to be on the cards in the short term either.
Challenges and opportunities
All in all, although these conditions may not please property owners and sellers, first home buyers seem set to continue prospering. In a gently rising rate environment, longer term fixes may remain popular too, such as the two-year term.
Kelvin Davidson
Cotality NZ Chief Property Economist
July 2026
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