Is New Zealand’s property market finally stabilising
Over the past two years, New Zealand’s property market has witnessed significant fluctuations, with prices soaring during the pandemic and then experiencing a downturn as the world adjusted to new economic realities.
However, recent trends suggest a potential stabilisation in the market, influenced by decreasing mortgage rates and an increase in property listings, Stuff reported.
Supply and demand dynamics
As of February, the number of properties listed on the market reached 31,838 nationwide, marking a 26% increase over the five-year average, according to CoreLogic.
This rise in listings, while varied across regions, indicates a potential easing in the market’s tightness, particularly in areas like Canterbury, Wellington, Otago, and Gisborne, where listings have surged by at least 10%.
Pricing trends across the regions
Despite an overall increase in listings, property prices across New Zealand have continued to lag.
The Real Estate Institute of New Zealand (REINZ) reported a 2.4% drop in the median price to $772,000 in the year to February, with areas outside Auckland seeing a median price reduction of $10,000.
However, regions like the West Coast and Southland witnessed notable price increases, suggesting regional disparities in market recovery, Stuff reported.
Market outlook: A buyer’s advantage?
With an abundant supply of listings and subdued price movements, CoreLogic’s chief property economist Kelvin Davidson (pictured) suggested that the market dynamics currently favour buyers.
“The stock of listings available to purchase is currently at its highest level for this time of year since at least 2018, which means buyers can still take their time to try and achieve a deal in their favour,” Davidson said.
The lure of lower mortgage rates
The recent introduction of competitive two and three-year mortgage rates has started to influence borrower preferences, which had previously favoured shorter terms.
This shift is expected to influence future market dynamics significantly, especially as 71% of existing mortgages are set to expire their fixed terms soon.
Improving affordability
While the property market remains challenging, affordability has improved to levels not seen since 2019, thanks to lower property values, rising incomes, and decreasing mortgage rates.
This improvement is crucial as it enhances buyer accessibility to the market, though Davidson noted, “to see any real and lasting progress, New Zealand needs more housing.”
Comparative affordability in major centres
Interestingly, Wellington has emerged as the most affordable major center, a significant shift from its previous status. The city’s property value-to-income ratio has dropped to 6.5, making it more accessible than it has been in over five years.
Meanwhile, Auckland and Tauranga also show signs of improved affordability despite their high property values, Stuff reported.
Challenges persist for renters
Wellington leads as the most expensive city for renters, with median rents surpassing those in Auckland.
As the property market continues to evolve, stakeholders from buyers and investors to renters must navigate the complexities of a market in transition, balancing optimism with realistic expectations of the challenges that lie ahead.
