NZ Housing Market Predictions: Trends, Insights, and Forecast for 2024

The housing market in New Zealand has been one of the most vibrant and discussed sectors in recent years. In 2024, a mix of economic, political, and social elements are anticipated to affect the trends and future outlook of the housing market. It is essential for homebuyers, investors, and industry participants to grasp the emerging trends and forecasts for the NZ housing market.

This article will explore the significant predictions and factors that are influencing the housing market in New Zealand, providing a thorough overview of what to expect in 2024 and beyond.

1. A Snapshot of the NZ Housing Market in 2024

The housing market in New Zealand has experienced swift price increases over the last decade. Nevertheless, in the previous two years, elements such as rising interest rates, inflation pressures, and government policies have led to a more balanced market. While property prices in certain regions may undergo a correction, demand continues to exceed supply in many areas.

As we transition into 2024, these prevailing trends are expected to persist, with affordability, supply, and government regulation remaining crucial factors in shaping the housing market.

Key Highlights:

Urban Price Stabilization: In metropolitan areas like Auckland and Wellington, property prices might stabilize or even see a slight decline in 2024 due to increasing mortgage rates and tighter lending standards.

Growth in Rural and Regional Areas: Smaller towns and regional locations are likely to experience heightened demand as more individuals seek affordable housing options away from major urban areas.

Effect of Interest Rates: The interest rate increases by the Reserve Bank of New Zealand (RBNZ) will continue to influence buyer affordability, which may slow price growth in certain locations.

Government Regulation: Ongoing government initiatives to control housing prices and boost home supply may further affect market dynamics in 2024.

2. NZ Housing Market Predictions for 2024  

2.1 Interest Rates and Mortgage Rates Will Keep Rising  

Interest rates will be a significant factor affecting the housing market in 2024. The Reserve Bank of New Zealand (RBNZ) has enacted multiple interest rate increases to address inflation, leading to a notable rise in mortgage rates over the past year.  

Prediction: It is anticipated that interest rates will stay relatively high in 2024. For potential homebuyers, this implies larger monthly mortgage payments. For investors, this may indicate a decrease in property purchases, as borrowing becomes costlier.  

Example: A first-time buyer securing a 30-year loan for $600,000 at a 5% interest rate would likely have monthly payments around $3,300. However, if the rate climbs to 6%, their monthly payment could rise to about $3,600, which may render homeownership less accessible.  

2.2 Stabilization or Slowdown of Property Prices in Major Cities  

Following the COVID-19 pandemic, housing prices in New Zealand surged, especially in urban areas like Auckland, Wellington, and Christchurch. Nevertheless, with affordability becoming an increasing issue, a slowdown in price growth is projected for 2024.  

While it is unlikely that house prices in these key cities will experience drastic declines, there is a strong chance of price stabilization or minor decreases, particularly in regions with high demand.  

Prediction: As borrowing expenses increase, the market may see a correction, particularly in areas where prices have become excessively high. This could present a chance for first-time buyers or investors looking for bargains in 2024.  

Example: In 2023, Auckland’s median house price was noted to be $1.1 million, showing a slight drop from the previous year. In 2024, a continued slowdown in property price growth may be observed due to diminished affordability, creating a more inviting market for those who are able to purchase.  

2.3 Rising Interest in Regional and Rural Properties  

Due to high prices in urban centers and the rising cost of mortgages, an increasing number of New Zealanders are searching for housing options in regional and rural areas that are more affordable. The trend toward remote work has also contributed to this movement to smaller towns and suburban locations.  

Prediction: The inclination to move away from major urban areas is expected to persist in 2024. Properties in less populated towns, such as Rotorua, Queenstown, and Tauranga, are likely to see heightened demand and possibly increased property values.  

Example: In the Waikato region, towns like Cambridge and Hamilton have experienced notable increases in property prices over the past year, as more individuals are drawn to the area for affordable housing and an improved lifestyle. This trend is projected to continue in 2024, as remote work remains a common practice.  

3. Government Policies and Regulations Affecting the Housing Market  

The government of New Zealand remains actively involved in the regulation of the housing market to tackle affordability challenges and promote increased supply. Various policy modifications and initiatives are anticipated to affect market trends in 2024.

3.1 KiwiBuild and Housing Initiatives  

The KiwiBuild initiative, designed to boost the availability of affordable housing, is set to persist in its efforts throughout 2024. This program focuses on constructing thousands of new homes for first-time buyers, with the possibility of additional initiatives aimed at addressing affordability matters.

Prediction: A sustained emphasis on augmenting the supply of affordable housing in prominent cities and rural regions can be expected.

Example:  

In 2023, the KiwiBuild initiative successfully completed 3,000 homes and has plans for further developments in 2024. The government is likely to launch new programs or financial aid for first-time homebuyers to enhance affordability support.

3.2 Bright-Line Test and Tax Reforms  

The Bright-Line Test, which imposes taxes on capital gains from residential property sales within five years, is expected to stay in effect and may be prolonged for a more extended period. This tax reform intends to deter speculative buying and stabilize the housing market.

Prediction: An extension of the Bright-Line Test to ten years could dissuade short-term investors and impact the volume of property transactions in the market.

Example:  

The existing five-year Bright-Line Test has already contributed to tempering the speculative housing sector. If the duration is extended to ten years, it would further dissuade investors from flipping properties and assist in stabilizing the market.

4. Factors Influencing the NZ Housing Market in 2024  

4.1 Population Growth and Migration Trends  

The ongoing population growth in New Zealand, particularly within urban settings, continues to stimulate housing demand. With the reopening of international borders, immigration levels are returning to what they were before the pandemic. New Zealand’s attractiveness for skilled workers and students suggests that the demand for housing, especially rental units, will persist to rise.

Prediction: Immigration and population growth are anticipated to sustain high demand, particularly for rental properties, which could exacerbate supply shortages in crucial urban hubs.

4.2 Housing Affordability Remains a Key Issue  

As property values have been rising consistently, many first-time buyers are struggling to enter the market. Efforts by the government to enhance affordability will be vital in shaping the market’s trajectory over the next few years.

Prediction: Housing affordability is expected to continue being a significant hurdle for first-time buyers in 2024, with prices likely to remain unattainable for many unless substantial policy changes take place.

5. Conclusion: Anticipated Developments in the NZ Housing Market for 2024  

In summary, the New Zealand housing market in 2024 is projected to see a blend of stability and transition. While major urban areas might encounter slower price increases and potential corrections, regional markets are likely to keep experiencing growth. Interest rates will be a crucial consideration in determining affordability, and government initiatives will significantly influence tackling supply challenges. 

Buyers, investors, and sellers need to remain aware of the changing market dynamics to make well-informed decisions.