Forecast for New Zealand’s Property Market: Falling Mortgage Rates, Rising House Prices, and Opportunities for First-Time Buyers in 2024

Date Published: 16 January 2024

Key Facts

• The property market can expect a boost from potential reductions in mortgage rates and strengthening house prices in 2024.
• Experts voice uncertainty over the exact timeline of these changes.
• ANZ economists predict a 4% increase in house prices.
• New Zealand’s strong population growth could escalate housing prices and rent.
• Residential investment might become more appealing due to recent changes in the government’s policy.
• ASB’s senior economist anticipates a 7-10% growth in house prices due to substantial population growth and likely peaked mortgage and interest rates.
• Unemployment is predicted to rise to over 5% which might cap the housing price increase.
• First time home buyers should take advantage of current lower housing prices.
• Experts suggest avoiding lengthy fixed rates to avoid breaking costs if rates start to drop.
• Banks are showing more flexibility over deposit sizes since changes to Loan to Value ratio were made.

Article Summary

The New Zealand housing market is expected to witness some favourable transformations in 2024. Predictions from ANZ’s chief economist, Sharon Zollner, suggest a likely dip in mortgage rates and a potential 4% increase in house prices. However, exact timeframes for these changes remain uncertain. Zollner also warns of the potential challenges brought about by robust population growth and inflation rates.

ASB’s senior economist, Mark Smith, echoes this sentiment of a stronger housing market but also forecasts a sharper rise in house prices by 7-10%. He cites population growth and a probable peak in mortgage and interest rates as driving factors. However, he cautions that rising unemployment rates, which are projected to exceed 5%, might limit the scope of house price growth.

With the current dip in house prices, experts believe the timing is right for first home buyers to enter the market. Sanjeev Jangra, a Loan Market mortgage adviser, advises buyers to avoid long-term fixed rates considering the upcoming reductions. Furthermore, with banks now more accommodating over deposit sizes due to changes in the Loan to Value ratio, purchasing property has become more accessible.

The eligibility criteria for first home buyers are not stringent with a maximum combined income limit under $150,000. Experts encourage first home buyers to seize the current market conditions to their advantage and begin their property investment journey. Overall, 2024 brings optimism for the New Zealand property market with mortgage rate drops and house price increments on the horizon.

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