Upcoming GDP Data Could Signal Positive Trends for New Zealand Housing Market

Date Published: 20 June 2024

Key Facts

• Thursday’s release of Q1 GDP figures is highly anticipated, with experts divided on whether it will show growth or a small decline.
• 58% of new loans in April were fixed for a year or less, an increase from previous months, indicating that homeowners are betting on future rate cuts.
• CoreLogic data indicates a patchy housing market, with some suburbs experiencing significant declines and others posting gains.
• Net migration has slowed from its October peak but remains high, with a concerning trend of younger New Zealand citizens departing.
• Rental price growth has decelerated to 3.8%, marking its lowest increase since June of the previous year, benefiting tenants and potentially aiding in controlling inflation.

Article Summary

The GDP figures for the first quarter, set to be released Thursday, are keenly awaited and expected to generate substantial headlines. Experts are divided on the outcome: some predict a marginal growth of 0.2%, while others foresee a slight decline. While a rise in GDP would generally be positive, a decrease could be more beneficial for the housing market as it might accelerate the decline of inflation, leading to earlier interest rate cuts.

Recent data reveals an increase in new loans fixed for a shorter period, rising to 58% in April compared to previous months. This suggests that many homeowners are hoping for a reduction in interest rates. However, the anticipated rate cuts might still be six to nine months away, and currently, short-term interest rates remain higher than their longer-term counterparts.

The housing market continues to exhibit inconsistent trends, with some suburbs experiencing declines exceeding 5% while others have posted similar gains. This instability reflects heightened mortgage rates and broad availability of properties for those who can secure financing. Despite this, the overall momentum in house prices has diminished in recent months.

Migration numbers have decreased from their peak but remain significantly higher than the long-term average. This downtrend in migration is coupled with a record number of New Zealand citizens emigrating, which could pose challenges for regional economies reliant on younger populations. Additionally, the growth rate of rental prices has slowed, easing the financial burden on tenants and potentially helping to moderate inflation.

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