How the NZ property market looks right now

Whether you're planning to buy or sell, it looks like a state of equilibrium is about to return to the property market.

New Zealand's median property price fell only 0.2% in August, according to CoreLogic, with Chief Property Economist Kelvin Davidson suggesting it's only a matter of time until the national median flattens out or even starts to rise.

“Although values have continued to edge lower nationally, the floor is likely to be near, with many of the key fundamental drivers now turning around,” he said.

“It’s notable that mortgage rates are likely to now be close to their peak, although further small changes can’t be ruled out as global markets, and hence wholesale financing costs, remain a little jittery. On top of that, migration has significantly boosted property demand, and labour markets remain robust. 

“We’re also now starting to see the impact of the loosening in the loan-to-value ratio rules from June 1st flow through to more low-deposit lending for both owner-occupiers and investors with a 35-40% deposit, who were previously locked out.”

Mr Davidson said that the fading downturn at the national level was mirrored across most of the main centres, with Auckland and Wellington prices declining 0.3% in August; Hamilton and Tauranga falling 0.2%; and Christchurch actually rising 0.2%.

Dunedin's median price fell 1.1% in August, but this was much more likely to be a blip than a new, weaker trend.

Mr Davidson said it looked like 2023 would play out as had been predicted at the start of the year, with an initial downturn followed by signs of an upturn late in the year.

“However, the next phase for the market still looks likely to be slow and patchy, rather than the rampant upturn we saw over 2020-21. After all, the volume of sales is rising from a very low base of less than 60,000 annually, and it may be quite some time until purchasing activity returns to ‘normality’, which is around 90-95,000 sales per annum,” he said.

“Affordability is still challenging, mortgage rates are set to be higher for longer, and debt-to-income ratio caps for mortgage lending remain on the cards for 2024 – all factors which could help to contain any major market exuberance. 

“In that environment, buyers won’t feel excessive pressure to secure a deal before somebody else does, in turn keeping some kind of lid on price growth. Granted, animal spirits can drive faster growth in values than the underlying drivers would suggest is likely, but psychology will likely have a lesser role to play when mortgage rates are 7% and those real cash outgoings to service debt each week are high.”

New Zealand's median price has fallen 13.2% during the downturn, but it remains 24.3% higher than in March 2020, when the pandemic began.

Want to buy a home or investment property before prices start rising again? Contact me to secure finance.