Stagnant Housing Market in 2023: No Changes for First Home Buyers Despite Slight Increase in Interest Rates

Date Published: 29 January 2024

Key Facts

• The New Zealand housing market remained unchanged in 2023 for first home buyers which saw them neither better nor worse off in the property market.
• House prices, particularly those at the lower quartile, experienced minimal movement in 2023.
• The national lower quartile selling price of houses remained constant at $585,000 from 2022 to 2023.
• Mortgage interest rates saw a modest increase from 6.58% in December 2022 to 6.98% in December 2023.
• Median wage rates for workers aged 25-29 increased, giving them an extra $73 per week.
• Rising costs in other areas such as transport, food and rent may have neutralised any financial benefit gained from stable house prices and increased wages.

Article Summary

In 2023, potential first home buyers in New Zealand saw no significant changes in their capacity to afford a home. House prices, especially at the lower end of the market, showed negligible shifts within the year, with the national lower quartile selling price remaining consistent at $585,000 at both the end of 2022 and 2023. This stability meant that the deposit needed for first home buyers remained constant, making the financial expectations of entering the housing market predictable for them.

The country did witness a gradual increase in mortgage interest rates – from an average of 6.58% in December 2022 to 6.98% in December 2023. Consequently, despite unchanged house prices, the rise in interest rates would have resulted in slightly higher mortgage repayments for new home buyers.

The challenge of increased mortgage costs was countered to a certain extent by a rise in median wages of workers between 25-29 years, providing them with an additional $73 per week. However, it is also important to consider the overall inflationary impact of increased living expenses. The rising costs of transport, food, rent, and pretty much every other necessity, probably offset the financial benefits brought by steady house prices and wage hikes.

Considering these balancing factors, it can be inferred that the year 2023 neither improved nor worsened the situation for first home buyers in New Zealand. Their potential financial gains were likely eaten up by the general increase in living expenses.

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