New Zealand Housing Market: A Calm December Amidst Economic Uncertainty

The New Zealand property market experienced a relatively subdued December 2024, according to the latest data from the Real Estate Institute of New Zealand (REINZ) and inflation figures from the Reserve Bank of New Zealand (RBNZ). While sales saw a slight uptick, price declines and economic uncertainties paint a complex picture for the market’s immediate future.

Sales Up, Prices Down:

Nationwide sales increased marginally by 1.8% year-on-year, rising from 5,420 in December 2023 to 5,518 in December 2024. However, this positive sign is overshadowed by a slight decrease in the national median price, which fell 0.6% year-on-year to $775,000. The month-on-month picture is even softer, with a 1.8% decline from $789,000. Major cities like Auckland and Wellington experienced more significant price drops, with decreases of 4.3% and 5.4% respectively over the past year.

Inventory Dynamics and Days to Sell:

National inventory levels have seen a substantial 18.5% increase year-on-year, reaching 29,478 properties. Interestingly, there was a 13.3% decrease in inventory compared to the previous month, suggesting some potential shift in supply dynamics. The national average for days to sell properties has also increased, rising by six days year-on-year to 42 days.

Inflation and Interest Rate Outlook:

The RBNZ’s latest data reveals a slowing of inflation, though locally generated inflation remains a concern. Looking ahead, further rate cuts are anticipated this year as inflation aligns with RBNZ expectations. However, external factors, particularly exchange rates, introduce uncertainty into the equation. The future direction of the Official Cash Rate (OCR) – whether it will need to dip below the neutral level of approximately 3.25% or potentially rise – remains unclear. Monetary policy decisions for 2025 and beyond will be heavily dependent on the still-uncertain economic outlook.

Uncertainty Weighs on the Market:

This economic uncertainty directly impacts the property market. Despite the prospect of lower interest rates, broader uncertainties and financial pressures felt by many households will likely keep the market in a state of flux. Easing migration rates further contribute to weaker demand. Currently, there are no clear indicators pointing towards a significant upswing in property prices. The market appears to be in a holding pattern, awaiting greater clarity on the economic horizon. The lack of a definitive upward trend suggests a period of cautious observation for both buyers and sellers.