Fewer homeowners selling their existing home to buy another is the main cause of the current property slump says Cotality

A decline in the number of people moving up the property ladder into their next home is a major reason for the current slump in residential property sales, according to property data company Cotality.

"After a consistent run of growth from mid-2023 to late last year, overall [residential] property sales volumes have shown a year-on-year decline each month so far in 2026," Cotality's latest NZ Property Pulse report says.

"This has resulted in the annual running total dropping from 91,973 in [the 12 months to] December [2025] to 89,043 [-3.2%] as at August [2026]," the report says.

It appears that fewer homeowners moving houses is to blame.

"The group that's made the biggest contribution to the slowdown is movers - or relocating owner-occupiers - with their annual running deal total dropping from 25,044 in December [2025] to 23,398 [-6.6%]," the report says.

"Granted, this isn't a huge collapse, but it does show a degree of caution," it says.

The Cotality report cites a number of likely reasons for fewer people moving homes.

"It's important to note that movers can only relocate if there's another property to buy, but a lack of available listings is clearly not an issue at the moment," the report says.

"Instead, this is buyer caution, against a backdrop of economic uncertainty, with the unemployment rate above average and job security somewhat diminished, movers are are simply tending to stay where they are more often than usual, rather than trade up or down," it says.

Another reason that existing homeowners may be more cautious about selling up and moving, is that the amount of equity they have to put towards a deposit on their next home has likely declined since the market peaked in 2021.

Interest.co.nz tracks how much equity a couple could have if they purchased their home 10 years ago with a 20% deposit at the lower quartile price, then sold the home now at the current lower quartile price to move on up to a more expensive home.

Their estimated equity would have peaked at about $478,000 at the November 2021 peak of the last housing market boom, but would have dropped back to $347,000 by August this year, in line with the decline in house prices.

That means they would have $131,000 less equity (-27%) to put towards their next home. You can read more about this here.

Over the same period, the average two year fixed mortgage rate has increased to 5.30% from 4.08%.

Those figures suggest moving up the property ladder to a more expensive home should still be a viable move and within affordable limits for many homeowners.

However it has become a little more difficult financially than it was five years ago and this is likely contributing to the caution that's evident amongst movers at the moment.

The Cotality report says movers' home buying activity may remain subdued for the time being.

"A more pronounced comeback by movers may not be on the cards for a while yet, with economic growth not really anticipated to strengthen on a sustained basis until the second half of next year," it says.