2023 was a year of two halves for New Zealand’s property market. The first half of the year saw declining house prices and sales, but things started to stabilize in the second half.
Market Trends in 2023
House sales hit their lowest point in 40 years around April, with only about 60,475 properties sold over 12 months. Property values dropped by an average of 5% nationwide. Some areas experienced sharper declines, while others showed moderate growth.
The most expensive suburbs continued to hold their value, while the most affordable areas remained a good option for buyers looking for lower-priced properties.
Signs of Market Recovery
Around May and June, the market showed signs of improvement. The cost of borrowing and availability of home loans played a role in this change. While mortgage rates continued to rise, the increase was much slower compared to previous years.
In addition, lending rules were relaxed in May and June, making it slightly easier for buyers to secure loans. As a result, property sales began to rise, although the number of homes available for sale remained relatively low.
Some areas saw houses selling quickly, while others had properties staying on the market for extended periods.
Impact of Migration on Housing
One unexpected factor in 2023 was the surge in people moving to New Zealand. While this didn’t immediately push up house prices, it did put pressure on rental properties. Vacancy rates dropped, and rent prices increased in many areas.
Some suburbs experienced significant rent hikes, reflecting the growing demand for rental homes.
What to Expect in 2024
As the market enters its next phase, key factors to watch include employment trends and mortgage rate adjustments.
A new government is expected to introduce policies that may attract more property investors, such as reducing certain tax obligations and reinstating mortgage interest deductions. However, high mortgage rates and low rental returns may still limit investor activity.
First-home buyers are likely to continue benefiting from savings schemes and low-deposit loan options. Meanwhile, lending restrictions based on income levels are expected to stay in place.
Overall, experts predict a moderate recovery, with property sales rising by about 10% and prices increasing by around 5%. While this is an improvement, it remains below long-term average growth levels, making 2024 a year of slow but steady recovery for the housing market.
Final Thoughts
2023 was a challenging year for the housing market, but signs of stability appeared in the second half. Looking ahead, the market is expected to grow gradually in 2024, with better conditions for both buyers and investors. However, economic factors such as interest rates and employment trends will play a crucial role in shaping the market’s future.