The combination that could reward investors
- Kieran Trass
- 3 days ago
- 7 min read
New Zealand's property investors have stepped back. The biggest landlords are buying at a seven-year low, many smaller ones are heading for the door, and first home buyers have taken a record share of what is left.
Every property cycle turns on what people do when the mood has gone against owning.
Right now it has. Rents feel flat, costs relentless, the headlines grim, and the confident crowd of two years ago is quietly heading for the door. If you have studied enough cycles, that is precisely the moment worth a second look.
The herd is unmistakable
The evidence of a collective retreat is hard to miss.
The largest landlords, those carrying mortgages on 10 or more properties, have cut their buying to 2.3% of purchases, a seven-year low, down from a 4.1% peak at the end of 2023, on Cotality data reported by Stuff in July 2026.
Among smaller Mum and Dad landlords, a recent survey had 38% planning to sell in March 2026 against 12% planning to buy, a record for selling intentions and the lowest buying reading in a survey that began in mid-2021. By April the sell figure had eased to 37% and the buy figure had recovered to 17%.
Mortgaged investors overall have pulled back for two consecutive quarters. Relocating owner-occupiers have taken their smallest share of purchases since early 2009, the depths of the GFC.
The word the market keeps using for investors is weary.
This is textbook herd behaviour. And the crucial thing about a herd is not that it is wrong to be nervous, the pressures are real, but that it moves together, and it moves late.
The largest landlords have almost halved their share
What the herd leaves behind shows up in who is buying instead. In the second quarter of 2026 first home buyers took 28.3% of purchases, a record for the series, against a long-term average of around 22%. Mortgaged multiple property owners took 22.5%, against around 24%. Movers took 25.6%, against around 28%.
Who is buying while the herd leaves
One group is well above its long-term average and two are below. The market has not shrunk. It has changed hands.
A framework for reading the crowd
To see why the exit matters, separate two things investors do. One is activity, how many homes they buy. The other is dominance, their share of all purchases. Put them on a grid and each combination describes a different point in the cycle.
The four positions
The crowd is most present in the top-left and most absent in the bottom-right. Where you sit relative to it is a choice.
The crowd buys high and sells low
Track the mortgaged investor share against its long-run average and the herd's timing gives itself away.
Mortgaged investors took 29% of purchases in the first quarter of 2021, the peak of the last surge. They took 21% at the twin troughs in the second quarters of 2023 and 2024.
They take 22.5% now, below a long-run average of around 24% measured back to 2005.
Mortgaged investor share against its long-run average
Notice the pattern. The heaviest investor presence lined up with the frothy top of the last cycle, when buying felt safest. The thinnest readings came when it felt hardest. The herd, almost by definition, is most eager to own when prices are high and most reluctant when they are soft, which is precisely backwards from how you would time it deliberately.
When the exit is crowded, the entrance is empty. The discomfort is real, and it is exactly why the entrance is empty.
The discomfort could be the opportunity
Look past the sentiment at what the retreat has actually created on the ground.
Listings are elevated and stock is plentiful, so buyers have real choice for the first time in years. Vendors are cutting asking prices, and Cotality's own commentary has described buyers as holding the power when it comes to price.
Investor competition, the very thing that used to force entry-level buyers to overpay, has thinned out. That thinning is visible in the record first home buyer share.
Interest deductibility on residential rental property returned to 100% of interest incurred from 1 April 2025, and the rules, including the exemptions that still apply, are set out by Inland Revenue at ird.govt.nz. Mortgage rates are below their peak. What either of those means for a particular purchase depends on the borrower, the property and the structure, and that is a conversation for a professional adviser rather than an article.
None of it shows up in a mood survey.
Counter-cyclical, not reckless
This is not an argument to charge in blind.
The herd's reasons are genuine. Rents are soft, running costs keep rising, a large tranche of mortgage debt is due to reprice, and an election brings tax uncertainty over capital gains and deductibility. A serious buyer weighs all of it.
The counter-cyclical case does not claim those risks have vanished. It observes that they are visible and openly discussed, which is a different thing from a risk nobody has noticed, and that competition is scarce while they are.
Contrarian investing isn't fearlessness. It's the discipline to buy quality within your own means and time horizon when others can't or won't, rather than waiting for an all clear which, by definition, only ever arrives once everyone else has heard it too.
The parts that cut the other way
Everything above describes what has already happened. Here is what a sceptic would raise, and they would be right to raise all of it.
The current reading is not extreme. At 22.5% the investor share sits about a point and a half below its long-run average, and the same series reached 21% twice in the last three years. Measured against the average rather than against the 2021 peak, this is a modest deviation, not a dislocation.
The category is not what its name suggests. Cotality's classification counts anyone buying a subsequent property with a mortgage, so a holiday home sits in the same bucket as a rental. Treating it as a pure measure of investor intent asks more of the series than it can carry.
A crowded exit is not a signal. Buyer composition has thinned ahead of periods when prices rose and periods when they kept falling. It tells you who is in the market. It does not tell you what the market does next, and anyone presenting it as a timing indicator is overreaching.
The second axis of the framework is not evidenced here. Every figure in this article is a share. The number of homes investors actually bought is a separate series and it is not presented.
The survey is a small self-selected panel. The Investor Insight survey draws 162 to 230 responses from a self-selecting group of landlords. It is a useful read on mood. It is not a probability sample and it does not measure transactions, so it should not be weighed against Cotality's transaction data as though the two were the same kind of evidence.
National series describe no individual property. Buyer composition is measured across the whole country. Nothing in it describes a suburb, a street or a specific purchase, and the conditions that matter to a buyer are local.
Buying into a quiet market means owning through it. Thin competition on the way in is the same thin competition on the way out, and the holding period is where that gets tested. Soft rents and repricing debt are current conditions, not resolved ones.
What it means
The signal to carry isn't a forecast that the market has bottomed. Nobody rings that bell.
It's the framework. Watch investor buying and investor share together, and watch the crowd. Right now the share measure sits below its long-run average and the crowd is at the exit, which is the least comfortable and least competitive moment in the cycle.
The cycle tends to reward temperament, the willingness to look hardest exactly when everyone else has looked away.
About the numbersBuyer-share figures are from the CoreLogic New Zealand and Cotality Buyer Classification series for New Zealand. Cotality was formerly CoreLogic. Second quarter 2026 shares are first home buyers 28.3%, movers 25.6%, and mortgaged multiple property owners 22.5%, as reported by Kelvin Davidson, chief economist at Cotality, on 20 July 2026. The 2020 and 2021 readings, including the first quarter 2021 peak of 29%, are from CoreLogic New Zealand quarterly updates. The 21% readings in the second quarters of 2023 and 2024 are from Cotality, 14 April 2026. No sourced quarterly reading for 2022 was located, so no 2022 point is plotted and nothing is interpolated across the gaps.Long-run averages are Cotality's, measured back to 2005, and are stated by Cotality as approximate: around 22% for first home buyers, around 28% for movers, and around 24% for mortgaged multiple property owners. Cotality does not publish these averages to one decimal place. The share of purchases by buyers with mortgages on 10 or more properties, 2.3% in the April to June 2026 quarter and 4.1% at the end of 2023, is Cotality data reported by Stuff on 24 July 2026 and is not sourced to a Cotality release. Landlord selling and buying intentions are from the Investor Insight survey compiled by Crockers Property Management and Tony Alexander, March 2026 (230 responses) and April 2026 (162 responses). The survey began in mid-2021, so any record it reports is a record over that period. It is a self-selected online panel rather than a probability sample, and the provider does not publish field dates. Interest deductibility is per Inland Revenue, residential property interest rules, at ird.govt.nz.Buyer classification measures the share of transactions by buyer type across New Zealand and does not describe any region, suburb or individual property. Cotality's mortgaged multiple property owner category counts buyers purchasing a subsequent property with a mortgage and is not restricted to buyers letting the property. Third quarter 2026 data is expected in October 2026 and all figures are subject to revision. |
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