Conflict continues to drag on housing market in June

The key numbers...

The housing market’s weakness continued into June, with both sales and prices continuing their seasonally adjusted declines that have prevailed since February.

Sales numbers were down 1.7% from May (seasonally adjusted), with this decline making it the first time since 2022 that sales have fallen for four consecutive months. Although the 2.9%pa decrease in sales from June 2025 compares favourably with May’s 9.8%pa drop, the timing of Matariki (in June last year, but July this year) means that underlying activity is probably weaker than June’s annual change suggests.

Seasonally adjusted sales volumes have declined 8.8% since February and are now at their lowest level since January 2025.

The stock of properties on the market rose another 1.7% in June (seasonally adjusted), topping 35,000 for the first time since 2015.

House prices in June were down 0.5% from May (seasonally adjusted) and 0.8%pa from June 2025. House prices are now at their lowest level in three years and just 1.1% above the post-COVID low recorded in May 2023.

Southland was the only region to record higher sales volumes in the June quarter compared with a year earlier (up 1.7%). Canterbury, Otago, and Taranaki were the only other regions to record smaller declines in sales than the nationwide average.

These regional trends are also reflected in house price growth, with Southland (8.6%pa), Otago (4.3%pa), and Canterbury (4.1%pa) recording the largest price increases over the last year. Wellington (-4.5%pa) and Auckland (-3.0%pa) are at the other end of the price growth spectrum.

...and our reaction

June data shows the continuing effects of the Iran War on demand in the housing market, with buyers cautious in the face of economic uncertainty, cost pressures on household budgets, and rises in fixed mortgage rates since the start of this year (with the prospect of more to come).

REINZ data is based on when properties go unconditional, meaning that June data is too early to show any positive market response to the apparent peace deal reached in mid-June between the US and Iran (a deal which now appears to have fallen over).

Although the Reserve Bank increased the official cash rate this month, financial markets have pared back their expectations of interest rate rises during 2027. If this lower interest rate profile is sustained, in tandem with improved economic growth, it could help improve buyer confidence in the market.

The elevated supply of homes and wide choice available for buyers suggest that house prices will remain under pressure for some months, even if sales activity stabilises in the second half of this year.