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Navigating the Waves: New Zealand Housing Market Predictions for 2024

Updated: Dec 22, 2023


As we stand on the precipice of 2024, the New Zealand housing market, guided by the insights of Ed McKnight from One Roof in an article dated 19/12/2023, prepares to embark on a new journey. The market's trajectory over the past four years has been a rollercoaster ride, shaped by external forces, notably the seismic impact of the COVID-19 pandemic. The journey includes a remarkable 40% surge propelling the nationwide average property value to a zenith of $1.09 million in February 2022, followed by a 14% dip to a trough of $943,749 in June. Since then, a gradual recovery has unfolded, with the nationwide average property value ascending by almost 3%, gaining notable traction, especially in major metropolitan areas.

New Zealand's Average Property Value Since 2018

Property value data derived from the OneRoof-Valocity House Value Index, taken on November 20, 2023.

Chart: OneRoof / ValocityGet the dataCreated with Datawrapper

Predictions for 2024:

January – Varied Opinions:

As the dawn of the new year emerges, familial gatherings and BBQs become the stage for sharing prophecies on the property market. Caution is advised, recognizing the Dunning-Kruger effect, where nascent knowledge may breed overconfidence.

February – Building Consents Decline:

The trajectory of building consents, which soared to 4,200 in February 2022, is anticipated to continue its descent. Decreasing consents persist as a consequence of diminishing property prices and escalating construction costs, prompting developers to bide their time for a more lucrative market.

Building consents per month

Chart: Ed McKnight – Opes Partners fro OneRoofSource: Stats NZCreated with Datawrapper

March – Positive Shift in Perception:

Having reached a nadir across New Zealand, property prices are projected to rebound by 2-4%. Come March, the average Kiwi is expected to discern this favorable shift, fostering optimistic water-cooler conversations.

April – Tax Changes for Investors:

April marks the initiation of lower property taxes introduced by National and Act. This change, potentially reverting the bright-line test to two years, is poised to reshape the market dynamic.

May – Persistent Impact of High Interest Rates:

Despite ANZ's projection of interest rates peaking in March 2024, their sustained elevation in May is foreseen to continue adversely affecting property investors' cash flow.

More properties require a top-up

Chart: Ed McKnight – Opes Partners for OneRoofSource: ValocityCreated with Datawrapper

June – KiwiBuild Changes:

National's decision to discontinue KiwiBuild seeks to redirect funds to incentivize councils for increased property consents. While its impact on 2024 consents may be modest, it sets the stage for potential recovery in the residential construction sector in 2025 and 2026.

July – Inflation Decline:

Inflation, presently at 5.6%, is predicted to markedly decrease by July, aligning with expectations ranging between 2.5% and 4%, as forecasted by banks and the Reserve Bank.

Inflation predictions

This shows the average minimum and maximum of the inflation predictions for: ANZ, ASB, Kiwibank, BNZ, Westpac, Reserve Bank, Treasury and NZ Institute of Economic Research

Chart: Ed McKnight – Opes Partners for OneRoofSource: NZ Institute of Economic Research. Created with Datawrapper

August – Rising Rents:

The burgeoning population, fueled by migration, exerts pressure on the rental market. Rents are anticipated to escalate at a rate surpassing 5%.

Net migration is increasing (fast)

Chart: Ed McKnight – Opes PartnersSource: Stats NZCreated with Datawrapper

September – Introduction of DTIs:

In September, speculation abounds that Reserve Bank Governor Adrian Orr will introduce debt-to-income (DTI) ratios, potentially heightening the challenge of securing mortgages for existing rental properties while bolstering new builds.

October – Falling Interest Rates:

By October, the descent of interest rates is expected to commence, with wholesale rates trending downward and the possibility of reaching the low-to-mid sixes by year-end.

November – Builders' Financial Strain:

As the property market decelerates, builders, having concluded existing projects, may grapple with financial strain, potentially leading to bankruptcies.

December – Reflecting on Predictions:

Acknowledging the inherent uncertainty in economic forecasts, the article concludes that these predictions offer a glimpse into potential trends. A retrospective glance in December will gauge the accuracy, with an optimistic target of achieving correctness in more than half of the predictions.

Additional Market Developments:

Recent adjustments by ANZ to term deposit and home loan rates, responding to wholesale swap rate declines, add nuanced layers to the evolving narrative. Concurrent governmental commitments, such as reducing the bright-line test from ten years down to two years as of 1st July 2024 and reinstating interest deductibility on rental properties, further enrich the ongoing narrative. Stakeholders in the real estate sector are primed to vigilantly monitor these developments as 2024 unfolds, seeking insights into the housing market's trajectory and potential opportunities or challenges.


Ed McKnight One Roof 19 Dec 2023

NZ Herald 20 Dec 2023

1 News Reporters 20 Dec 2023

These are the author's opinions only, and should not be taken as financial advice.

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