NZ Housing Market Shows Signs of Revival, But Luxury Home Sales Struggle Amid Policy Changes

Date Published: 5 January 2024

Key Facts

• The housing market is reviving slowly.
• A campaign promise from National to invite foreign buyers back, later discarded by New Zealand First, dashed hopes of luxury home owners.
• The sales of luxury homes across Auckland decreased by 70% in the last quarter, a drop of $1.5 billion in 2023 year on year.
• The market was mixed in 2023, with high interest rates softening the demand and supply shortages keeping the market tight.
• Home loan rates escalated from less than 3% to 6.5-8.5%.
• For the first time in 18 months, more Kiwis expect house prices to rise rather than drop, as per ASB’s year-end housing market report.
• Treasury anticipates an increase in house prices by approximately 5% in 2024, with a significant increase in property listings expected around February/March.

Article Summary

The New Zealand housing market is showing signs of recovery. However, home owners hoping for sizeable profits from their property sales this year could be let down. Luxury home owners were excited about the possibility of the return of foreign buyers, thanks to National’s campaign promise. But the plan was later shelved by New Zealand First, causing some disappointments.

Regardless, the real estate market across Auckland experienced a hefty decrease in the sales of luxury homes. Over the last quarter, the sector saw a 70% dip, equivalent to a $1.5 billion year-on-year decrease in 2023. Despite this downside, Caleb Paterson, a real estate agent, expressed optimism for 2024. He anticipates a surge in the market as homeowners gain confidence and embrace change, thus stimulating the market.

Interest rate hikes in 2023 brought a somewhat mixed bag for the housing market. While soaring rates tended to dampen the demand, supply shortages made the market competitive. By the end of last year, home loan rates surged from under 3% to anywhere between 6.5% and 8.5%.

Despite the challenging conditions, the Treasury forecasts a 5% improvement in house prices for 2024. The first few months are set to see a substantial influx in property listings on the market, indicating a buoyant start to the year.

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