Key Facts

  • Price growth in the housing market over the first quarter has been inconsistent across major New Zealand cities, with a notable rise in Wellington at 0.9 percent.
  • The number of houses listed for sale has increased in Q1, helping to moderate price growth, with high interest rates contributing to the slowdown.
  • The CoreLogic House Price Index increased marginally by 0.5 percent in March, making the overall gain for Q1 2024 only 1.1 percent.
  • The average property value in New Zealand rose by 3.2 percent in March, reaching a value of $934,806, but it is still over 10 percent less than the most recent peak.
  • Despite interest deductions supporting property investors’ cash flows, high interest rates remain a significant challenge.

Article Summary

The NZ housing market experienced subdued price growth in the first quarter of 2024, according to CoreLogic NZ’s chief property economist, Kelvin Davidson. Despite a strong 0.9 percent price surge in Wellington, other major centres, including Christchurch, Dunedin, and Auckland, saw limited gains ranging from 0.4 to 0.6 percent. Conversely, Hamilton and Tauranga experienced a minor reduction of 0.2 percent.

Several factors have led to this modest rise in prices. One of the critical elements is the persistently high mortgage rates which continue to daunt potential and existing borrowers. Davidson stated these rates remained at the forefront of borrowers’ considerations, whether they’re taking out a new loan or repricing an existing mortgage.

An increase in property listings in Q1 2024 also contributed to the cooling price increase. The sellers’ market observed in late 2023 has now seemingly shifted in favour of credit-approved purchasers. The presence of more options for potential buyers helped moderate property prices across the nation.

Looking forward, the prospects of an official cash rate cut by the Reserve Bank are still uncertain, hinting at the likelihood of flat fixed mortgage rates for at least another six to nine months. Short-term property investors and homebuyers should brace for continued high interest rates in the foreseeable future.

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