High Mortgage Rates and Low Sales Keep NZ Housing Market Steady, Prices Rising Slowly.

Date Published: 1 March 2024

Key Facts

• The New Zealand residential housing market is stable, with high mortgage rates and low sales volumes.
• Property researchers CoreLogic indicated a slight increase of 0.3 percent in home values in February.
• Average home values have decreased by 1.4 percent from the previous year, currently standing at $930,495.
• All main centres showed less than 1 percent growth in February, with Christchurch experiencing the most significant annual increase of 1.6 percent.
• CoreLogic predicts a 10 percent growth in national sales volumes in 2024, with a 5 percent increase in prices.
• First home buyers are making use of KiwiSaver for part of their deposit and are utilising low deposit lending allowances offered by banks.
• Mortgaged investors are currently inactive in the housing market due to transitional tax and lending regulations.

Article Summary

The New Zealand residential housing market is currently experiencing stability, with high mortgage rates and low sales volumes being the current trend, according to CoreLogic. In February, home prices saw a marginal increase of 0.3 percent, marking a slight decrease in the rate of growth compared to January’s 0.4 percent. However, this is a 1.4 percent drop from the previous year, bringing the average home value to $930,495.

There has been nominal growth in all major centres, with each recording less than 1 percent increase in the month. Yearly, Christchurch reported the highest growth at 1.6 percent. CoreLogic’s Chief Property Economist, Kelvin Davidson, stated that potential home buyers and sellers are being cautious, which is leading to modest price increases.

Davidson highlighted the challenges for new entrants in the housing market, particularly in terms of securing deposits and meeting loan serviceability criteria. He also pointed out that existing homeowners looking to upgrade still have to plan their finances thoroughly. He predicts further rate hikes from the Reserve Bank, with cuts being an unlikely scenario. As a result, short-term fixed mortgage rates may stay high for a while.

Davidson also noted that market conditions are favourable for first-time homebuyers, who are leveraging KiwiSaver for part of their deposits and taking full advantage of banks’ low deposit lending allowances. However, he observed that mortgaged investors are currently not active in the housing market due to transitional tax and lending regulations but advised keeping a close watch on this group in the coming months.

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