The ultimate review: from winter to dawn? What major events affected New Zealand’s Chinese property and construction sectors in 2024?

In 024, New Zealand’s property and construction sectors experienced a year full of challenges and opportunities. From expectations of interest rate cuts as inflation eased, to a wave of construction business failures and major government reforms affecting housing, lending and banking, every month left its mark. These policies and market developments profoundly influenced the industry’s direction, while giving practitioners and consumers much to consider and anticipate. Let us look back at the major events that affected New Zealand’s Chinese property and construction sectors this year, and revisit the key topics that had a profound impact on the industry.

 

January highlights:

Inflation slows, fuelling hopes of interest rate cuts

 

2024 began with a closely watched economic release: annual growth in New Zealand’s Consumer Price Index (CPI) fell to 4.7% in the final quarter of the previous year, its lowest level in two years. The result was below the central bank’s earlier forecast of 5%, providing an important signal that inflationary pressures were easing. However, the increase remained above the central bank’s target range of 1–3%, indicating that achieving its policy goal would still take time. A market consensus gradually emerged: falling inflation had laid the groundwork for future monetary policy adjustments. (Click to read more）

 

February highlights:

A wave of construction business failures: an industry downturn and a crisis for a sector giant

 

In February, the difficulties facing New Zealand’s construction sector came into focus. With market demand slowing and cost pressures continuing to rise, the industry was undergoing a comprehensive adjustment. Data showed that construction company liquidations remained high, with 99 companies liquidated in the final quarter of 2023. Although this was fewer than in the preceding three quarters, the liquidation rate was still 2.2 times that of other industries.

At the time, building consent applications were falling sharply and borrowing costs were rising, leaving small businesses bearing the brunt. Experts said many companies were struggling to keep operating because they lacked strategic planning and financial backing. Meanwhile, industry leader Fletcher Building was also in difficulty.

 

Construction experts at the time believed that although the downturn was less severe than during the global financial crisis of 2008, the breadth of the challenges was concerning. Fletcher’s difficulties were seen as a reflection of the construction sector’s wider condition. Despite pressures on both funding and demand, strong migration growth and possible interest rate cuts still offered hope for a market recovery. Master Builders chief executive David Kelly said the key ahead was to strengthen businesses’ resilience to market changes. He also advised homeowners to use staged payments flexibly when signing contracts to guard against the risks of fluctuating costs. (Click to read more）

 

March highlights:

The Prime Minister’s apology, a market misjudgement and interest rate expectations

 

March’s economic and political attention centred on two issues: a housing allowance scandal and controversy over keeping interest rates steady. Major developments involving the Prime Minister and the financial sector made successive headlines, prompting widespread discussion.

 

The Prime Minister’s allowance scandal

Prime Minister Christopher Luxon faced a public backlash over his housing allowance. He was revealed to have claimed NZ$52,000 while living in his own mortgage-free Wellington apartment. His actions were criticised as falling short of public expectations, particularly while the government was calling for cuts to welfare spending. He eventually decided to repay the allowance and stop claiming it to defuse the controversy. The public reacted strongly, saying the Prime Minister should exercise greater care in handling public resources.

The interest rate decision and the market’s misjudgement

This month, the central bank announced that it would hold the Official Cash Rate (OCR) at 5.5%, reiterating that it would remain high for an extended period to constrain consumer demand and bring inflation down. The decision contrasted sharply with earlier market expectations of a rate increase. ANZ’s OCR forecast proved to be “completely wrong”, and the bank publicly apologised, acknowledging that it had misjudged spare capacity in the economy. Markets adjusted quickly, with two-year swap rates falling sharply.

 

April highlights:

Lending reforms announced

 

Commerce and Consumer Affairs Minister Andrew Bayly and Housing Minister Chris Bishop jointly announced major lending reforms aimed at simplifying loan applications, reducing compliance costs and tackling harmful practices such as loan sharking. The changes would remove affordability checks, improve access to lending for first-home buyers and investors, and give financial institutions greater discretion. The reforms also included transferring regulatory responsibility to the Financial Markets Authority to streamline financial system rules. In the short term, the policy could stimulate housing market activity, but its long-term impact would still depend on market supply and further regulatory measures. (Click to read more）

 

May highlights:

Government announces major construction sector reforms

 

An independent review of Kāinga Ora revealed poor financial performance, prompting Prime Minister Christopher Luxon and Housing Minister Chris Bishop to announce major reforms, including restructuring the board, simplifying operating directives and developing a financial turnaround plan. The review found that Kāinga Ora’s debt would rise to NZ$23,000,000,000. Ensuring the agency’s financial sustainability would be the new leadership’s top priority, while the KiwiBuild affordable housing programme would also be formally scrapped, marking a new phase in New Zealand’s housing policy. Meanwhile, Prime Minister Christopher Luxon and Housing Minister Chris Bishop confirmed that the KiwiBuild affordable housing programme would be formally scrapped. Most notably, the government announced that the First Home Grant would end from 22 May, with around NZ$245,000,000 redirected to social housing to build 1500 new units. This marked a significant shift in housing policy from subsidising private home purchases towards supporting social housing. (Click to read more）

 

June highlights:

Government simplifies the process for building granny flats

 

New Zealand’s housing policy underwent several important changes in June, attracting widespread public attention. The government announced the removal of resource consent requirements for homes under 60 square metres, aiming to simplify the construction of granny flats and increase the supply of affordable housing. Housing providers and opposition parties alike welcomed the policy, although it also raised concerns about housing density and pressure on infrastructure. Meanwhile, the foreign buyer ban returned to the spotlight, with industry figures calling for it to be relaxed to attract high-end investors and offset losses in New Zealand’s premium property market. The government currently had no intention of changing the ban, but Deputy Prime Minister Winston Peters’ comments left open the possibility of future policy adjustments. These developments reflected New Zealand’s continuing efforts to balance housing affordability with economic benefits. (Click to read more）

 

July highlights:

Housing planning and construction sector reforms step up across the board,

with remote inspections leading a new trend

 

In July, New Zealand’s housing and construction policies underwent profound changes as the government announced several major reforms targeting housing planning and the construction sector. Housing Minister Chris Bishop announced six new policies, including simplifying development rules, increasing urban density and setting council housing growth targets, to address the longstanding housing crisis. Meanwhile, Building and Construction Minister Chris Penk introduced new rules for remote inspections, with plans to make them the default option for building consent inspections to improve efficiency and reduce approval delays. The move was seen as a key solution to the current shortage of building inspection capacity, although it also prompted discussion about the allocation of responsibility and practical implementation.

 

The government’s reforms also included easing restrictions on the building materials market and simplifying approvals for small building projects, reflecting its strong focus on improving construction sector efficiency and increasing housing supply. Industry practitioners broadly welcomed these measures, but their implementation would require further balancing of efficiency and regulatory standards to ensure the policy goals were achieved effectively. (Click to read more 1）（Click to read more 2）