Key Facts

  • Nationwide average property value increased almost 3% after bottoming out in June, 2022 at $943,749.
  • Building consents peaked in February, 2022 and have since fallen due to rising construction costs and falling property prices.
  • Market conditions suggest property prices across most of New Zealand have bottomed out and recent increments have ranged from 2-4%.
  • National and Act’s lower property taxes, when implemented in April, 2024, are expected to positively impact the real estate market.
  • High interest rates predicted for May, 2024 are likely to continue hurting property investors’ cash flow.
  • Rapid population increase and the scrapping of KiwiBuild by National is putting pressure on the rental market, heightening expectations for a rental hike.
  • Introduction of Debt-to-income (DTIs) ratios by the Reserve Bank in September, 2024 will possibly impact the terms of existing outstanding mortgages while new builds would be exempted to encourage housing supply.
  • Expected drop in interest rates by October, 2024 will lower the cost of borrowing for mortgages.
  • The sluggish property market may lead to some builders going bankrupt as sales have been low.

Article Summary

The New Zealand property market has experienced significant fluctuations in the last four years, significantly impacted by Covid-19. After a 40% surge, house prices hit a peak of $1.09 million in February 2022, before dropping 14%. There has since been a slow but steady recovery with the nationwide average property value rising nearly 3%.

Looking ahead to 2024, the trajectory of the housing market appears promising but complex. Building consents are expected to continue decreasing due to the decreased profitability for developers in the current market environment. However, property prices are projected to recover, with public perception of market conditions brightening by March 2024. Legislative changes such as the implementation of lower property taxes in April 2024 and the scrapping of KiwiBuild promise to further change the landscape of the property market.

Throughout 2024, ongoing challenges are expected. Interest rates are expected to continue hurting property investors’ cash flows until a projected decrease in October. Similarly, inflation rates are forecasted to decline significantly by July 2024. Amid an increasing population and the abolition of KiwiBuild, rental prices are set to rise. The introduction of Debt-to-Income (DTI) ratios by September 2024 is set to make mortgage acquisition for rental properties tougher to stimulate housing supply growth.

In a more pressing concern, the sluggishness of the property market might hit developers hard, possibly leading to a number of bankruptcies. Despite these, the overall trajectory of the housing market is upwards, and by December 2024, a clear picture of the housing market’s performance should emerge.

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