Key Facts

  • New Zealand saw a slowdown in its housing market in 2023, with only $62.116 billion worth of new mortgages being issued, according to Reserve Bank figures.
  • The average size of mortgages has increased while the number of mortgages issued has dropped. Comparing 2023 to 2015, the number of mortgages taken out is less than half.
  • The housing market in 2021, during the mid-pandemic frenzy, had about $37 billion more in mortgage loans compared to 2023.
  • The first year that witnessed a significant drop in mortgage loans was 2017, following stricter loan to value ratio (LVR) limits implemented by the Reserve Bank in 2016.
  • First Home Buyers (FHBs) secured a larger share of the mortgage market – from 10.5% of mortgage advances total to a record high of 23.6% for the whole of 2023.
  • Investors, on the other hand, experienced a decline from a mortgage share of 32% in 2015 to just 17% for 2022 and 2023.
  • The number of mortgages taken out by investors has seen a decrease every year since 2015, except for 2020. In 2020, the number of mortgages taken out by investors soared to the highest total since 2016 due to the removal of LVRs at the onset of the pandemic.
  • The number of mortgages taken out by investors in 2023 was less than a third of what was taken out in 2015.

Article Summary

The detailed monthly mortgage figures published by the Reserve Bank show that the New Zealand housing market witnessed a considerable slowdown in 2023 with the total new mortgages amounting to $62.116 billion. This figure compares to 2015’s greater issuance of mortgages. Interestingly, the size of mortgages increased while the number decreased, pointing to changing market trends and conditions.

The figures reveal a loan market shaped by regulatory decisions. After the Reserve Bank implemented more stringent loan-to-value ratio (LVR) conditions in 2016, the market saw significant decreases in total mortgages. A particularly notable year was 2021, during the height of the pandemic, when the mortgage bogey reached $37 billion more than 2023’s figures.

There was, however, a rise in mortgages for First Home Buyers (FHBs), indicating a shift in market share. In contrast to their earlier 10.5% share, FHBs recorded a high of 23.6% in mortgage advances throughout 2023, even peaking at 25.2% in December 2023. Despite the slowdown in housing market activity, FHBs have come to dominate a larger part of the market.

Conversely, investors saw their share decline from 32% in 2015 to 17% for both 2022 and 2023. The number of mortgages taken out by investors experienced a significant drop since the implementation of stricter LVR limits in 2016, with the only increase observed in 2020 when LVRs were completely removed due to the pandemic. However, the declining trend has continued for investor involvement since then.

Source Link: To read the full article, click here.