May 2024 Market Update: Keep Calm & Carry On

robin-van-geenen-YBcjvOiwMXM-unsplashAs the New Zealand property market heads into what’s traditionally the slower winter months, now is a good time to take stock and make a decision on what your property goals are for 2024 and beyond.

The latest Corelogic data shows a slight drop in the average value of homes sold in April to $933,633, with variability across the country. Dunedin (0.7%), Hamilton (0.4%), and Wellington (0.4%) recorded only slight growth. Both Tauranga and Christchurch flattened in line with the national result (-0.1% apiece), and Auckland values dipped (-0.6%). Although we are past the “trough” (see graph below) we are still 10% off the peak of the market.

Following the latest inflation figures and commentary from the reserve bank in April, it is now widely considered that a reduction in the Official Cash Rate (currently 5.5%) will not occur until later in the year due to persistent inflation. This means there is stability in the market, home loan interest rates are likely remain at their current level for the next six months. Stability in any market is a good thing as it provides certainty. Shaun Taylor, CEO of Professionals New Zealand says, "Currently the market will operate in a relatively stable manner, with both sellers and buyers recognising that conditions are unlikely to shift significantly in the near future. Following discussions with Professionals office owners nationwide, it's widely agreed that now is a favourable window for transactions. In three years time we might look back on 2024 as a period of relative calm before an anticipated increase in activity, and as a good time to buy. It's a prime opportunity for buyers, as we anticipate a future decrease in interest rates, which is expected to spike demand and subsequently prices over the next five year cycle".

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Here are four good reasons to be positive about the property market.

1. The market is stable. We know that property prices have bottomed out, and buyers can be confident that they won’t lose money. Sellers can also be confident that with a strong marketing campaign and realistic outlook, they will get the best value for their home in this market and then be able to buy confidently in the same market.

2. Property is a great investment. Over time, property values in New Zealand have consistently increased, and we are past the trough in this next cycle. There has really never been a bad time to buy in the New Zealand property market, and this is still true. Although interest rates are high, any purchase will not result in a loss for the buyer, (check out our llistings in your area here.)

3. We are at the start of a new property cycle. Most economists agree that when (and it’s when, not if) interest rates come down and the Reserve Bank is able to tame inflation that we will enter a new cycle of growth. There has been pent-up demand in the market from uncertainty, which means that there are a number of buyers and sellers looking to sell in the short to medium term.

4. Immigration has been strong. New Zealand has experienced record immigration over the last two years, and it generally takes up to three years for immigration spikes to flow through to the to the property market, as immigrants rent before they buy. As we head into the end of 2024 and 2025, we will see a number of this demographic looking to buy property in New Zealand.

In this market a trusted salesperson is worth their weight in gold. Before you decide on buying or selling talk to a local expert, someone who has their finger on the pulse of your local area. As you can see from the CoreLogic report for April, the New Zealand property market is made up of smaller regional markets that move in different ways. Some are up, some are down, and depend on various factors. By talking to your local experts, they can let you know if certain buyers are entering the market, what value homes are moving more than others and put you in touch with other local experts such as mortgage brokers.  

Now is a great time to buy and sell as we move into the winter months. You can be assured that the market is more stable than it has been for some time, and there are opportunities for buyers and sellers to achieve their long-term property goals and aspirations. Shaun says, the market is very much the market, and there is unlikely to be too much change for the next 6-12 months. “The Professionals team are passionate about their patch, and there are often local factors that impact different markets at different times. So if you are looking to achieve your financial and property ownership goals in 2024 the first action should be to talk to one of our trusted Professionals Real Estate Agents. I believe they’re the best in the business, and they can help you take the next step on the property ladder.”

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