New Zealand Property Market Update: Navigating the Current Landscape
As we move through 2024, New Zealand's property market is undergoing significant changes. Although recent months have presented challenges, such as fluctuating prices and high interest rates, there are promising signs of recovery and opportunity. Let's explore the latest trends, government initiatives, and investor sentiments shaping the market.
Average dwelling values have declined over the past few months, with the average asking price dropping by $90,071 since February. In Auckland, the average asking price has decreased by over $100,000. Despite these declines, recent data shows an increase in sales activity and a reduction in the days properties spend on the market. This suggests a potential turnaround as buyers and sellers adapt to the new market conditions.
KEY STATISTICS
New dwelling consents: Down 23% year-over-year, with the value of new residential construction work consented decreasing by $3.3 billion.
Market activity: Recent reports indicate that sales have slumped to multi-year lows, while stock levels have reached multi-year highs across various regions.
Property values: CoreLogic reports that the increase in property values seen earlier this year was a 'dead cat bounce,' and values have been slowly declining for the last three months.
Government Initiatives
Housing Minister Chris Bishop is taking proactive steps to address housing affordability by liberalising market rules, setting housing growth targets, and redefining urban limits. These changes aim to stimulate the market and provide more opportunities for both buyers and sellers. Bishop's approach includes abolishing urban limits, which could significantly boost housing availability and affordability.
Investor Confidence
Investor confidence is rising, fuelled by policy changes and the potential for lower interest rates later this year. Kiwibank's chief economist predicts house price gains of 5-7% due to record migration numbers and demand outstripping supply.
Additionally, the reduction in new dwelling consents by 23% year-over-year highlights a tightening supply, which may drive prices up shortly.
Opportunities and Challenges
The property market is influenced by various factors, including high interest rates, low rental yields, and changing government policies. Despite these challenges, the market is showing resilience. The repeal of non-interest deduction rules regarding mortgages, reduction of Brightline taxation timeframes, and other policy reversals are expected to boost investor confidence and market activity.
Property Development Insights
The tightening supply of new dwellings and high demand presents a unique opportunity for property developers. With fewer new consents being issued, developers who can bring quality projects to market efficiently will be well-positioned to benefit from the increasing demand. This environment is conducive to innovative property development solutions, such as high-density housing and mixed-use developments, which can meet the diverse needs of modern buyers.
LOOKING AHEAD
While predicting the exact trajectory of the market is challenging, experts suggest a potential for growth as confidence returns and regulatory changes take effect. With a notable increase in sales activity and a reduction in days to sell, the market is poised for a possible rebound.
At Fox Group, we remain committed to supporting developers and investors through these dynamic times. Our expertise in non-bank lending solutions provides flexible and tailored financial support to navigate the evolving market landscape. Whether you want to start a new project or expand existing developments, we're here to help you achieve your goals.
The Fox Group team excels at securing and arranging funding for every stage of the development process. Contact us for your financing requirements and bespoke advice.
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