Modest Growth in Q4 2023
New Zealand House Prices Experience Stall, Anticipating Modest Growth in 2024
House prices in New Zealand experienced a modest increase in the December 2023 quarter, as the latest Quotable Value House Price Index reveals. The average home value nationally rose by a slight 0.6 percent to $905,070, marking a deceleration from the 2.3 percent increase reported at the end of November.
Regional Variations in Growth
The market growth was not uniform across the country. Rotorua and Tauranga experienced the most significant growth, with increases of 6 percent and 3.3 percent respectively. On the other hand, New Plymouth saw the smallest growth at a mere 0.4 percent. The major cities of Auckland, Wellington, and Christchurch also witnessed growth, albeit modestly.
Factors Influencing the Market
The sluggish growth of the housing market could be attributed to the seasonal trend of homeowners preferring to list properties during the summer months. The activity in January’s market is thus anticipated to provide better insight into the market’s direction. High net migration continues to fuel demand and stress the rental market, while interest rates, expected to remain stable through much of 2024, act as the primary constraint on home value growth.
Despite a decrease in sales volumes, real estate professionals remain optimistic about market normalization and stability in prices for the upcoming year. The new coalition government has introduced tax reforms that have received mixed responses regarding their impact on landlords and borrowers. Meanwhile, ASB has slightly reduced its two-year mortgage rate from 7.05 percent to 6.89 percent. However, some areas have faced challenges, such as the lowest monthly figure in 16 years recorded on one website, and the sale volumes in the first half of the year dropping to the lowest in about 40 years.