Buyers appear comfortable at current rates, though ASB expects mortgage rates to keep rising
Activity and pricing in New Zealand’s lifestyle property market are steadying across most regions. There are early signs of improving confidence among buyers and vendors, according to Bayleys’ latest Lifestyle Rural Market Update.
The October report, from Bayleys Insights & Data and based on REINZ figures, said buyers appear increasingly comfortable transacting at current interest rates. Rate anxiety appears to be settling, it said, as rates have risen with the Reserve Bank moving to control inflation but remain well below previous highs.
The Reserve Bank lifted the official cash rate by 25 basis points to 2.75% on 2 September, its second straight increase. Its next review is on 28 October.
Rate outlook divides lenders
Not all lenders share that read. ASB said in its September report that mortgage rates are expected to rise, not fall. Its Housing Confidence Survey found a net 57% of respondents expect borrowing rates to rise over the next year, around the highest since April 2023.
The Bayleys report points to residual caution linked to the Middle East conflict, fuel prices and the cost of living. ANZ’s September business survey found rising oil prices weighed on activity indicators late in the month.
Healthy returns across several primary sectors are supporting confidence in provincial property markets, the report said, adding some support to lifestyle property.
Buyers are favouring well-presented, sensibly priced properties, with ease of access and everyday practicality key drawcards. The report said the super prime coastal lifestyle market has produced particularly strong outcomes recently.
Where lifestyle property sales are strongest
REINZ data in the report shows 5,261 farmlet sales and 1,348 bareland sales in the 12 months to 30 June. The national median farmlet price is $1,111,000, with the middle 50% of sales between $820,000 and $1.47 million. The median bareland price is $460,000.
Auckland has the highest farmlet median at $1,634,000 and the West Coast the lowest at $727,500. Waikato recorded the most farmlet sales (866), ahead of Canterbury (744) and Auckland (628).
Among notable transactions listed by Bayleys, the highest was $2.93 million for a 1.2875ha property on the Coatesville-Riverhead Highway, followed by $2.9 million for 5.1452ha at Kinloch.
International buyers eye premium lifestyle properties
International interest is holding firm, the report said. It said updated Active Investor Plus (Golden Visa) settings are lifting interest in premium lifestyle and waterfront properties, especially at the top end.
Sensitive land rules narrow the options, it said, channelling buyers towards properties under 5 hectares. Law changes that took effect on 6 March let Active Investor Plus visa holders buy one residential property worth more than $5 million. The property must not be land considered sensitive, such as non-urban land over 5 hectares, law firm Anderson Lloyd said. The Overseas Investment Office had granted 13 such consents by 30 April.
On the 7 November general election, Bayleys said buyer caution is a familiar story but the evidence is mixed. It tends to appear mainly when political debate puts housing in its crosshairs, the report said. With this campaign focused on other priorities, it expects the market to carry on without material impact.
Others see more risk. QV said on Monday that the election and interest rates were giving residential buyers more reason to take their time, and that investors were particularly cautious. QV’s index showed national home values down 1.5% over the September quarter. Labour has proposed a capital gains tax on investment property profits, OneRoof reported.
