Will the NZ housing market recover in 2024?

New report sheds light

Will the NZ housing market recover in 2024?

A new report says the housing market continues to show slight positive movement heading into the holiday season. The market is expected to take a slow recovery throughout 2024.

The latest Quotable Value (QV) House Price Index shows the national average home value is about 3.3% lower compared to the same period last year. The figures are also lower by 10.2% compared to data from January 1 to November 30, 2022.

With the national average now at $914,017, the average home increased in value by 2.3% over the three months to the end of November, a slight increase on the 2.1% quarterly home value increase reported in October.

Housing activity expected to pick up though slow

James Wilson, operations manager at QV, noted the residential property market had faced challenges since the COVID-19 pandemic, and the latest figures show signs of slow growth in the new year. However, he said the market would still likely have to take on the impact of high interest rates.

“Rather than the start of another major uplift in values, I expect we’ll see a return to a more ‘typical’ sort of housing market in the year ahead, with slow growth, and days to sell and listing numbers eventually returning to historic norms. This is not a bad thing given some of the economic challenges we all continue to face together as a country,” said Wilson.

“High interest rates currently have a stranglehold on the market and the economy as a whole, which won’t alleviate any time soon judging by the Reserve Bank’s most recent announcement. This is going to continue to put a damper on things next year, as it’s been designed to.”

Home values increased in Wellington (3.2%) despite uncertainty around job security within the public sector. Meanwhile, two urban centres recorded home value reductions in the most recent quarter: Tauranga (-0.1%) and Marlborough (-0.3%).

Wilson said activity and listings are starting to increase with the summer selling season underway. He noted an increase in immigration into New Zealand is also likely to help increase demand though that could mean increased pressure on the rental market.

The operations manager also acknowledged that first-home buyers have been the most active group in the housing market recently. “It will be interesting to see if significant numbers of investors do return to the market in the first half of 2024, given the new government’s policy settings. They’ll be hamstrung by affordability constraints just like everyone else, as the mortgage pain looks set to continue in 2024,” said Wilson.

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