Key Facts

  • House prices rose by 6.7% in Auckland and Wellington, and 4.6% in Canterbury after ceasing their fall mid-2024.
  • First home buyers substantially entered the market in February, accounting for a record percentage of total house sales.
  • Increased interest from investors was observed, however, high costs and unfavourable numbers have created hesitance.
  • Tenants are experiencing heightened competition for accommodation due to record net migration and changes in accommodation policies.
  • Despite higher-than-expected wholesale interest rates two months ago, these have started to fall due to reductions in US rates.
  • The prediction for house price growth in 2024 is around 10%, and potentially higher for 2025 due to certain market stimuli.

Article Summary

The residential housing market experienced several changes over the past year. House prices began increasing after they stopped decreasing in the middle of the year. The market saw a significant entry of first-time home buyers from February, accounting for a record portion of total house sales. Wholesale interest rates rose higher than expected two months ago, but they have been falling in response to declining rates in the United States.

Investors have shown increased interest in the housing market in recent months. This interest has been further spurred by the anticipated reinstatement of interest expense deductibility. Nonetheless, investors still remain cautious due to high costs and unappealing financial prospects. On the other hand, tenants are facing increased competition for living spaces due to a record net migration boom and the active discouragement of providing rental accommodation stimulated by previous government policies.

Looking ahead to 2024, house prices are expected to rise, with some restraint due to increasing unemployment rates. Factors that could potentially boost prices include the expectation of falling interest rates, sustained strong net migration inflows, and decreased production of new homes, leading to increased demand alongside reduced supply. For 2025, the momentum in the housing market is anticipated to heighten, likely driving prices higher, potentially leading to average gains closer to 15%.

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