June 21, 2024
As we navigate through 2024, understanding the dynamics of the property market is more critical than ever. The CoreLogic June 2024 Housing Chart Pack provides valuable insights into New Zealand’s property landscape, offering a comprehensive look at current trends, buyer behaviors, and financial conditions. Here’s a summary of the key highlights from the report.
In May 2024, New Zealand saw a continued recovery in sales activity with 6,789 transactions, marking a 9.2% increase compared to May 2023. Despite this rise, the market remains quieter than usual, with total sales over the past year still significantly below the long-term average of about 90,000 per year. This subdued activity is reflected in the overall inventory levels, giving credit-approved buyers more leverage in pricing negotiations.
Nationally, property values have seen modest fluctuations. Over the three months leading to May 2024, there was a slight 0.1% increase in average property values, while the annual increase stood at 1.0%. However, since peaking, values have generally declined by over 10% nationwide, with some regions experiencing even steeper drops. For instance, Auckland experienced a 0.8% decline in May, continuing the downward trend in major urban centres.
First home buyers (FHBs) continue to play a significant role in the market, representing 25% of purchases in April and May 2024. This group's strong presence is supported by factors like lower house prices, less competition, and financial aids such as KiwiSaver. Meanwhile, relocating owner-occupiers (‘movers’) have maintained a stable share of about 26-27%, indicating a steady demand in this segment.
The property market is navigating through various regulatory changes. Key updates include the upcoming debt-to-income ratio caps and the loosening of loan-to-value ratio (LVR) rules from July 2024. These adjustments, alongside the reinstatement of mortgage interest deductions, aim to stabilize the market amidst high mortgage rates. However, with no significant drop in mortgage rates expected soon, 2024 remains a challenging year for property values.
Rental growth appears to have peaked, with a 3.8% year-on-year increase in May 2024. This growth is slightly above the long-term average but significantly lower than the highs seen in late 2023 and early 2024. High rents in relation to household incomes and a slight easing in rental demand contribute to this trend. Despite the moderation, gross rental yields nationally are around 3.2%, up from the lows of 2022 but still less competitive compared to other asset classes like term deposits.
Different regions in New Zealand show varied performances. While Auckland and Wellington have seen declines in property values, areas like Christchurch have experienced milder reductions. The diversity in regional markets highlights the importance of localized insights for property decisions.
Current high mortgage rates continue to shape the lending landscape. With about 62% of existing mortgages fixed to reprice at higher rates over the next year, many households will need to adjust their finances significantly. New lending at high loan-to-value ratios remains low, constrained by regulatory limits and the economic environment.
Economic factors like employment rates, net migration, and the official cash rate (OCR) play crucial roles in the property market dynamics. While inflation seems to have peaked, the OCR remains high, influencing borrowing costs and market behaviours.
The CoreLogic June 2024 Housing Chart Pack underscores a period of cautious recovery and adjustment in New Zealand’s property market. As we move forward, staying informed and understanding these trends is vital for making smart property decisions. Whether you are a first-time home buyer, a seasoned investor, or looking to relocate, having a clear picture of the market can help you navigate the complexities and opportunities that lie ahead.
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Source:
Core Logic
