Key Facts

  • The housing market recovery to post-Covid peaks is expected to be gradual and likely occur by 2024, particularly in Wellington, Auckland and investor-centric suburbs.
  • National house prices are currently down 14% from the post-Covid peak in February 2022; with the largest losses in Wellington (25%) and Auckland (19%).
  • The recovery to pre-slump levels is predicted to be complete by 2025, with interest rates hovering around 7% for most of 2024.
  • High net migration is expected to boost recovery, especially in regions with a high number of rental properties.
  • Christchurch and the West Coast continue to perform well due to good rental yields.
  • Canterbury, Southland, and the West Coast experienced the least reductions since their 2022 peak with falls of 6.5%, 4.1%, and 2.9% respectively.
  • Market analysts suggest that a surge in migration, a decreasing supply of new housing, government policy changes, and past peak prices could potentially accelerate the recovery.

Article Summary

The recovery of New Zealand’s housing market post-Covid is expected to be slow and steady, with projections of a return to peak prices by 2024. This is owed to multiple factors including high net migration and falling interest rates. Region-wise, Wellington, Auckland, and areas with high rental activity are likely to recover faster. The current national house prices show a decrease of 14% from their peak in February 2022, with the steepest falls noticed in Wellington and Auckland.

Valocity’s senior research analyst, Wayne Shum pointed out the significance of interest rates in this scenario. The rates need to drop significantly for prices to rebound to their previous levels. With net migration experiencing a surge, investor suburbs and regions with an influx of temporary visa holders are expected to recover faster given their demand for rental accommodations. Despite the slump, places like Christchurch and the West Coast of the South Island have managed decent performances thanks to beneficial rental yields.

Experts like CoreLogic’s chief economist, Kelvin Davidson, advocate a more cautious stance with estimates reaching post-Covid peaks by 2026-27. Davidson stressed that regional aspects would heavily influence recovery trends, with areas such as Auckland and Wellington expected to exceed due to high inward migration. Meanwhile, Bayleys’ Chris Farhi anticipates a slightly more rapid recovery driven by inflating migration, dwindling housing supply, and certain policies improving demand.

Other market analysts like Ray White’s chief economist, Nerida Conisbee, drew parallels between the housing market recovery in Australia and New Zealand. Despite the significant price drops and high-interest rates, Conisbee expressed confidence in New Zealand’s market resilience and potential for recovery by the end of 2025.

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