Property market ended 2023 strongly, but 2024 might be weaker

New Zealand's property market ended 2023 with its third consecutive monthly increase in the national median price.

After the median rose 0.4% in October and 0.7% in November, it climbed another 1.0% in December, which was the strongest monthly gain since January 2022, according to CoreLogic.

In total, the national median increased 2.1% over the final quarter of 2023, reaching $924,000. The main population centres also recorded quarterly growth:

• Auckland = up 1.9% to $1.28 million.
• Tauranga = up 2.5% to $1.03 million.
• Wellington = up 2.0% to $908,000.
• Hamilton = up 2.4% to $806,000.
• Christchurch = up 2.9% to $755,000.
• Dunedin = up 3.3% to $631,000.

What to expect from 2024

CoreLogic Chief Property Economist Kelvin Davidson said the growth in late 2023 seemed almost inevitable given housing market sentiment had risen in recent months.

“This is off the back of several factors including the change of government, a peak – and even some falls – in mortgage rates, continued growth in employment and soaring net migration,” he said.

“However, I doubt that too many people are rushing out and buying property just because the recent downturn has suddenly made it look cheap. In fact, affordability pressures are still a major issue.”

Looking ahead to how the market would play out in 2024, Mr Davidson said price growth was likely to continue, but that it would be inconsistent due to the contrasting forces playing out in the economy.

For example, Mr Davidson noted that even though some fixed mortgage rates had fallen a little, the most popular shorter fixed terms, such as for one year, had been flatter at a high level.

“This is continuing to strain aspiring homeowners' ability to buy property. And of course, caps on debt-to-income [DTI] ratios remain on the cards within the next year, too. Sharper or more widespread falls in mortgage rates than the Reserve Bank would be comfortable with could perhaps bring forward the timing for those DTI restrictions, provided the banking processes are in place,” he said. 

“As such, although the general upwards trend for property prices is likely to continue in 2024, it may not be smooth from month-to-month, with some results stronger, but others much weaker. Underlying that patchy national picture would be variability at the regional level too, with the main centres potentially seeing the biggest boost from inwards migration, but provincial markets less supported.”

If you're planning to enter the market this year, the long-term outlook looks positive. House prices appear to be slowly bouncing back and interest rates seem to have peaked