“Mild Increase in New Zealand Housing Values in Q1 2024 Amid High Mortgage Rates”

Date Published: 5 April 2024

Key Facts

• The average value of New Zealand homes was $934,806 in Q1 of 2024, a 1.1% increase from last quarter, and a slight 0.1% increase from Q1 last year.
• High mortgage rates are a significant concern for borrowers, affecting decisions on new loans or repricing existing ones.
• While 80% mortgage interest deductions may improve cash flow for investors, these are not expected to significantly offset high interest rates.
• The first Official Cash Rate cut in the next cycle is approaching, but is not expected until at least next year.
• Increased listing activity in the first few months of 2024 has eased property prices, offering more choices for buyers.

Article Summary

CoreLogic’s latest quarterly figures indicate a modest increase in housing values at the start of 2024. The average home value in New Zealand increased by 1.1% since the previous quarter, placing the average home value at $934,806. In comparison to Q1 last year, this translates to a slight 0.1% increase.

According to CoreLogic’s Chief Economist, Kelvin Davidson, the housing market currently maintains a steady balance, described as “not too hot, not too cold”. However, among home buyers and existing borrowers, high mortgage rates are a major challenge. Even though property investors can expect some relief from the 80% mortgage interest deductions in the new tax year, Davidson does not believe it will sufficiently counterbalance the high interest rates.

In addition, the first Official Cash Rate cut in the next cycle seems to be on the horizon, but it’s not projected to arrive until next year at the earliest. This suggests that short-term fixed mortgage rates are unlikely to drop significantly for at least six to nine months.

Yet Davidson noted a positive trend in the robust supply of new listings that hit the market in the first few months of 2024. This has spurred a broader choice for buyers, helping to take a bit of heat out of property prices and shifting the balance back in favour of credit-approved purchasers.

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