Key Facts

  • Increased demand for properties and limited supply have resulted in a surge in house prices according to Quotable Value’s (QV) latest House Price Index.
  • First-home buyers are leading the property market recovery, in particular in the more affordable areas.
  • The National Party’s housing policies have been cited as influencing market dynamics, specifically the shortening of the Brightline test to two years and the reinstatement of mortgage interest payments as a tax deductible expenditure over a two-year period.
  • The average home value increased by 2.1% over three months to October, with the national average now sitting at $907,387.
  • Of the 16 main urban areas that QV follows, just three – Whangarei, Hamilton, and New Plymouth – saw a fall in average home values. Conversely, Auckland, Wellington and Christchurch recorded some of the most substantial gains.
  • QV maintains that, despite the property market’s rebound, it will likely remain “flat to gently rising” in the foreseeable future owing to economic headwinds.

Article Summary

The current housing market situation in New Zealand is driven by supply constraints with demand significantly exceeding available properties. This has primarily fuelled a rise in the house price index. The demands have surged notably owing to the influx of first-time buyers in the market, mostly focused on reasonably priced locations, thereby leading a recovery in the sector.

With the elections over and the National Party having secured a majority position, the housing market is expected to see policy effects. Key policies to affect the market include the shortening of the Brightline test duration and the possibility of including mortgage interest payments as tax-deductible over two years. Additionally, values for residential properties have been on an upward trend for the third consecutive month. The average home value recorded a 2.1% increase in the three-month period ending in October. Currently, the national average home value sits at $907,387.

The trends in the property value increase were not uniformly distributed across all major urban locations. Whangarei, Hamilton, and New Plymouth saw a decline in average home values, whereas Auckland, Wellington, and Christchurch experienced substantial gains. James Wilson from QV suggests that these trends are indicative of the housing market’s recovery. However, he projects that the recovery will result in a flat to mildly increasing market due to pressing economic challenges.

Finally, the source suggests that while first-time buyers have been instrumental in the sector’s recovery, it’s plausible that some investors may become more active in the future months. This could be primarily because of the increased certainty associated with the change in government. Such a development could intensify the competitive pressure on house prices, particularly in affordable areas experiencing rapid population growth due to record migration.

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