New Zealand Property Market Predictions in 2024
As 2024 approaches, New Zealand's property market is poised for some intriguing shifts. Forecasts for the upcoming year vary, with predictions ranging from modest growth to significant housing price rises, reflecting the dynamic nature of the housing sector.
A Spectrum of Predictions: Modest to Robust Growth
Forecasts for house price growth in 2024 vary, with analysts speculating ranges from 2.3% up to an optimistic 8%. Economist Tony Alexander projects a more bullish outlook, anticipating a 10% rise in house prices in 2024, and an even higher 15% increase in 2025. This upward trajectory suggests a closing window of opportunity for first home buyers, hinting at a market that's shifting gears towards a seller's advantage.
Predictions in Wellington property prices
Current Situation: As of recent data, Wellington has seen a significant decline in house prices, with an 18.1% fall from the previous year.
Future Outlook: Despite the recent drop, there are positive signals suggesting that property prices in Wellington might increase in 2024. Factors supporting this growth include peak mortgage rates, the reopening of borders to migrants, increased household income levels, and a significant demand for social housing.
Long-Term View: The market backdrop indicates that over longer periods, Wellington house prices are expected to follow a steady upward path, with any price fall expected to gradually recover.
It's important to note that these predictions are subject to change based on various factors such as economic conditions, government policies, and global events. For more detailed and updated information, it's recommended to consult with local real estate experts or follow the latest reports closer to 2024.
The Role of Economic Factors and Government Policies
The property market is invariably influenced by a myriad of factors, including economic conditions, interest rates, and government policies. For instance, the Treasury's forecast suggests a significant dip with house prices potentially falling almost 20% from their peak by mid-2024, before rebounding.
This prediction aligns with views from HSBC, which expects a 5% rise in housing prices by the end of 2024.
ANZ Bank New Zealand echoes a similar sentiment, forecasting a 5% annual house price inflation over 2024, before slowing down to around 3% in 2025. However, they caution about the potential of rising housing pressures leading to inflation, which could prompt a response from the Reserve Bank of New Zealand (RBNZ) in the form of interest rate hikes.
Supply Shortage as a Key Driver
A consistent theme across various predictions is the impact of supply shortages on house prices. New Zealand's housing market, much like many others, is grappling with a limited supply of homes. This shortage is expected to be a significant factor driving price increases in 2024, as forecasted by a Reuters survey of property market analysts.
Interest Rates:
Forecast Trends: The 1-year fixed mortgage interest rate, which reached 7.25% in 2023, is expected to fall to about 6.60% by the end of 2024. This decrease is consistent with the trend predicted by most banks, following the Reserve Bank of New Zealand’s (RBNZ) 20-month tightening cycle.
Inflation and Reserve Bank Response: The NZ Institute of Economic Research (NZIER) survey indicates that banks expect inflation to return to the 1-3% band by September 2024, which could lead to a reduction in interest rates.
External Factors:
Inflated Land Prices and Planning Restrictions: Red tape and planning restrictions contributing to inflated land prices are key drivers of the housing market. Legislation to relax planning rules and fund infrastructure is expected to make housing more affordable in the future.
Affordability Relative to Income: Despite the high prices, some measures indicate that houses are more affordable than they were three years ago, especially in terms of the share of income needed for mortgage repayments
The New Zealand property market in 2024 appears to be a landscape of contrasts and changes. While predictions range widely, the common thread is the market's responsiveness to economic, policy, and supply factors.
As always, the market's trajectory will have significant implications for buyers, landlords, sellers, and investors alike, particularly in key areas like Wellington. The year 2024 promises to be a defining period for New Zealand's property landscape, shaping the decisions and strategies of stakeholders across the sector.
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