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The current state of play for the New Zealand housing market

Power has shifted away from sellers and back in favour of buyers again.

By Kelvin Davidson 3 May 2024

After a pretty solid end to 2023 as confidence levels rose, the New Zealand housing market has kicked off 2024 in relatively subdued fashion. Yes, sales volumes are rising strongly in percentage terms, but that’s coming off a low base regarding the number of deals. Similarly, property values are rising, but momentum has faded a bit – after gains of 0.7% and 1.0% on the CoreLogic House Price Index in November and December last year, we had 0.4%, 0.3%, and 0.5% over January to March this year. On top of that, April was a minor 0.1% drop; essentially flat.

Of course, we’ve always been anticipating an ‘underwhelming upturn’ in 2024, and the patchy growth in sales and prices from month to month and across regions shouldn’t be too surprising. After all, housing affordability remains stretched (albeit better than it was in late 2021 and early 2022), mortgage rates are still high, and listing activity has risen quite strongly this year too. That’s shifting the balance of power away from sellers and back in favour of buyers again.

Even so, the property market still has some fairly solid support, in the form of a resilient labour market – with filled jobs growth still positive and low unemployment rate – and strong net migration inflows. To be fair, migration is flowing more into rental price pressure than house prices (at least for now), but either way, it’s still extra demand in the country for somewhere to live.

Looking ahead, the New Zealand housing market looks set to continue to grow in 2024 in terms of sales volumes and house prices, but there are significant headwinds, which mean the upturn might prove to be quite slow – certainly compared to the post-COVID boom. For a start, although the unemployment rate remains low, it is still creeping higher, and some job losses are starting to emerge.

In addition, inflation is still problematic, and the Reserve Bank doesn’t seem inclined to cut the official cash rate anytime soon. Of course, that’s not the only driver of mortgage rates, but significant falls in the latter don’t seem to be on the cards until later in 2024 (at the earliest). That will keep the pressure on new borrowers and also those households with existing mortgages who are coming up to a fixed rate renewal.

In addition, even when mortgage rates do start to fall more significantly, the other side of the coin will probably be the restrictive influence of caps on debt to income (DTIs) ratios for mortgage lending – which are set to be introduced at some stage relatively soon. DTIs may not do much straightaway, but as interest rates fall and people could theoretically take out bigger loans and/or purchase more properties, that’s when the new rules would kick in and limit that activity.

Within those overall patterns, we’d anticipate continued opportunities for first home buyers to access the market, especially when you consider additional support for that group from their KiwiSaver funds (which can be used for at least part of the deposit) and also being able to tap the low deposit lending allowances at the banks. Recently around 75-80% of all low deposit lending to owner occupiers has actually been going to first home buyers.

On the flipside, it might remain a little tricky for investors to make their first purchase or to expand their existing portfolios. Granted, looser LVR rules from the middle of the year and also the reinstatement of mortgage interest deductions will be a help, but with rental yields low and mortgage rates high, a typical property investment purchase in today’s market still requires a significant top-up of cash from other income sources.

Overall, we’re anticipating sales volumes to rise around 10% this year and house prices nationally by about 5% on average. The key, emerging risk to keep an eye on for 2025 and beyond is the possibility of fresh housing shortages, as our population continues to grow, but construction activity weakens. We think the risk of shortages is less than in the past, but still worth watching closely.


Kelvin Davidson
Kelvin Davidson

Chief Property Economist, CoreLogic -

Kelvin joined CoreLogic in March 2018 as Senior Research Analyst, before moving into his current role of Chief Economist. He brings with him a wealth of experience, having spent 15 years working largely in private sector economic consultancies in both New Zealand and the UK.

In his role with CoreLogic Kelvin’s focus is on keeping up to date with what’s going on in the property market and continually finding different ways for viewing and interpreting it. Kelvin’s economics background means that he knows his way around a spreadsheet, but more importantly he always puts more emphasis on providing the key insights and telling a story, whether his audience be clients or the media.