The Housing Market in New Zealand: A Time of Change29 Aug 2023

While 2023 has been a year of change and realignment for the New Zealand housing market, driven mainly by the increasing interest rate environment imposed through reserve bank actions to fight the demon of inflation, it is great to see the first buds of spring appear. Across most markets in New Zealand, our team are reporting increased buyer activity at open homes and in our auction rooms. This activity is growing out of confidence that interest rates are unlikely to increase much further and are now being spoken of as likely to decrease over the coming months. When coupled with pent-up buying needs from people who have put their lives on hold over the last twelve months of market challenges there is every reason to look forward with optimism.

As often happens during winter months new-to-market listings have been at a premium, this lack of new stock alongside increased buyer activity has moved the demand-supply equation in the seller’s favour. As we expect a flush of spring lists to come forward, as happens annually, canny sellers will be bringing their listing plans forward to beat this competition to the buyer pool!

Regarding price fluctuations and despite market challenges, the REINZ house price index rose 0.4% month-on-month in June, and the median house sale price in New Zealand remained unchanged at $780,000 for three consecutive months. This confirms our thoughts that the market may have bottomed out already and is starting to recover.

Recent data from Harcourts supports the view that house prices in New Zealand are likely to continue to rise driven by several factors. As Tony Alexander recently noted, there is a growing sense of FOMO among buyers in the housing market who can see that momentum has changed and they are looking to buy now before “missing out” on what has been a more reserved “buyer market” price-wise.

We believe that the springtime housing market will see an uplift in the volume of sales, with more listings coming onto the market and buyers more confident about making a purchase.

As the weather starts to warm up, just like every year more homeowners will be motivated to sell their homes. This will lead to an increase in the number of listings on the market, giving buyers more options to choose from. Additionally, the springtime is a popular time for families to buy homes, as they are looking to move before the start of the school year. These factors will combine to create a strong springtime housing market for buyers and sellers. If you are thinking about buying or selling a home, we repeat our view that you should act sooner rather than later, as the market is likely to become more competitive as the spring progresses.

The Reserve Bank has kept the official cash rate at 5.5% for the time being and has stated it is unlikely to lift further in the future. This gives the market confidence.

Overall, we believe that the housing market in New Zealand has reached a turning point and will continue to evolve positively in the coming months.