Will it ever end? Property prices fall and selling times lengthen… but these developments offer homeowners hope!

Over the past week, New Zealand’s property and construction sectors have seen a series of significant changes and developments. This article brings together and examines these key events. From house price movements and policy changes to the latest construction industry trends, YIJU New Zealand takes you through them.

 

Property prices fall and selling times lengthen

 

The property market remains under pressure, with falling house prices, fewer sales and longer selling times.

 

The Real Estate Institute of New Zealand’s (REINZ) national House Price Index (HPI), which tracks changes in residential property values nationwide, recorded an annual decline of 12% in April. Excluding Auckland, the decline was 11%.

 

Nationwide, the median house price fell 11% year on year to NZ$780,000. Prices declined in most regions, except the West Coast and Otago, where median prices rose.

 

National sales volumes fell 29% in April to 4262 homes, down on the previous month and 15% lower than a year earlier. New listings fell 19%.

 

The time taken to sell a property rose to 47 days last month, 9 days longer than a year earlier.

 

 

A ‘paradise’ for first home buyers

 

First home buyers’ market share reached a record 25% in the first three months of 2023. They are also buying more standalone houses than before. Standalone houses accounted for 75% of their purchases in the first quarter of 2023, compared with 71% a year earlier, and they are now paying less.

 

Related link: Research shows New Zealand’s housing correction is far from over, but this group can benefit immediately

 

According to CoreLogic’s latest First Home Buyer Report, the median price paid by first home buyers nationwide in the first quarter of 2023 was NZ$680,000, down from NZ$730,000 in 2022. In other words, first home buyers are getting more for their money, although fewer transactions were actually completed in the first quarter of 2023.

 

In the first quarter of 2023, first home buyers in Auckland paid the highest median price, at NZ$885,000, compared with NZ$1,000,000 last year. Prices in Wellington, Tauranga and Hamilton ranged between NZ$775,000 and NZ$730,000, while Christchurch and Dunedin were both below NZ$600,000, at NZ$580,000 and NZ$531,000 respectively.

 

Credit rules and affordability constraints still prevent many people from buying their first home, but the current market is very favourable for those with sufficient funds. House prices will grow steadily over an extended period, during which the housing market will be a ‘paradise’ for countless first home buyers.

 

 

Rents continue to rise steadily

 

Stats NZ rental data shows annual rent growth of 2.8% in the year to April. Growth has remained within the 2–3% range for four consecutive months, broadly in line with the long-term average. This suggests rent growth has recently returned to normal after a period of strong increases.

 

However, rental shortages have already emerged in some areas. Some newly arrived international students and migrants cannot find long-term rentals and have had to pay high prices to stay in Airbnb accommodation for several weeks. Recent growth in net migration also suggests that this ‘normalisation’ of rent growth could soon give way to stronger increases.

 

 

A wave of migration has arrived

 

Migration data released by Stats NZ last week shows arrivals in New Zealand increasing at an extraordinary pace, far outnumbering departures. Annual net migration in the year to March was around 65,400 people, roughly twice the long-term average. Clearly, this will increase demand for property.

 

 

Government to release the Budget this Thursday

 

There are also some major events to look forward to this week. The Government is scheduled to release its 2023 Budget on Thursday 18 May. Finance Minister Grant Robertson says this year’s Budget will have four themes: addressing cost-of-living pressures, maintaining essential services, recovery and resilience, and fiscal sustainability.

 

Several measures have already been announced, including cancelling projects such as the public media merger and scaling back clean vehicle subsidies and the social leasing scheme. The Prime Minister has also confirmed that the Budget will introduce no new taxes.

 

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The Government has said that any additional spending in particular areas of the economy, such as flood recovery, will need to be funded by reallocating money from elsewhere. This may mean the Budget has limited implications for matters such as monetary policy, with relatively few policies relating to property and construction. New Zealand Property Investors’ Federation vice-president Peter Lewis says the Budget will not bring major changes to the residential rental sector. Still, nobody can say for certain what will happen until the last moment.