Eight Months of Consecutive Decline: What's Behind NZ Property Market Slowdown?

The New Zealand property market has seen eight consecutive months of decline in sales, with August's figures being the lowest since 2011. According to Ed McKnight, an economist from Opes Partners, economic uncertainty, rising mortgage rates, and election/political wariness are behind this slowdown.

This decline is not only a concern for property market activity but also for those deriving revenue from it. Despite the annual running total still being above 89,000, which is not a disaster, the bottom line is that activity faces challenges right now.

The slowdown in sales has been underpinned by caution from relocating owner-occupiers, or movers, who are choosing to stay put more often than usual. This lack of activity is likely related to the sluggish economic backdrop and reduced job security, as well as perhaps less confidence that they'll get a price they want.

The Q2 GDP data showed a 0.2% rise in economic output for the April-June period, which was respectable given the uncertainty in the global economy. However, this still suggests a relatively subdued economy, with spare capacity lingering, which would tend to bring down inflation over the medium term.

Net migration is still rising but from a low base, with 20,351 people moving into New Zealand in the year to July, up from the trough of 9230 in August last year. However, this net migration tally remains relatively low by past standards and there is no evidence that it's putting pressure on property values or rents.