New Zealand property sales fell nearly 12% year on year in August to 6,175 deals, marking an eighth straight monthly fall, with recent official cash rate and mortgage rate lifts creating fresh challenges for a housing market already struggling to build momentum, according to a Thursday report by Cotality.

The report said first home buyers continue to increase their market share while existing owners remain reluctant to move, with buyers retaining the upper hand in the current market.

Cotality chief property economist Kelvin Davidson said first home buyers remain a key presence in the property market, accounting for a combined 29% of purchases across July and August, hovering near record highs.

Davidson said movers remain relatively subdued, which is one reason sales activity remains weak even though affordability has improved.

Davidson believes that the labor market may hold the key, with rising employment and better job security likely required before any growth in property values, although some investors may be buoyed by Labour's announcement that it will retain interest deductibility.