New Zealand Housing Market Update: Downturn Slowing, First Time Buyers on the Rise

There are signs that the housing market downturn in New Zealand might be easing, according to the CoreLogic NZ Monthly Property & Economic Update for November 2024. While property values are still declining, the rate of decline is slowing. The CoreLogic Home Value Index (HVI) fell 0.5% in October, following a 0.4% drop in September. These are smaller decreases compared to the previous four months, which each saw declines of 0.8% or more.

The median property value across the country now sits at $86,000, but there are regional variations. Wellington City has seen the most significant drop, with values down 1.5% over the month. Auckland City’s median value is only 3.5% higher than it was five years ago. However, some areas are showing signs of stability, with Dunedin experiencing a modest 0.4% decline and Tauranga even showing a slight increase of 0.2%.

Despite the slowdown in the decline, a high level of listings is putting a damper on any potential recovery. The total number of listings is 12% higher than this time last year and a whopping 79% higher compared to 2021. This creates a buyer’s market with more options available.

Interestingly, first-time home buyers are taking advantage of the current market conditions. Their share of sales reached a new high of 27.8% in October, well above the long-term average of 21%. This trend is likely due to a combination of factors, including falling interest rates and government initiatives to support first-time buyers.

On the other hand, existing homeowners looking to move are being more cautious. Their share of sales has fallen to 24.5%, possibly due to concerns about the weakening job market, particularly in areas like Wellington.

The Reserve Bank is expected to cut the official cash rate (OCR) again in November to support the economy and labor market. While a significant cut of 75 basis points is unlikely, a 50 basis point reduction is more probable.

The report also touches on other relevant topics:

• The financial system remains resilient, according to the latest Financial Stability Report.
• The US election results might cause some short-term uncertainty but are unlikely to significantly impact the NZ housing market.
• The government’s plan to allow some builders to self-certify their work is generating concerns about quality control in the construction sector.

Overall, the New Zealand housing market appears to be in a state of cautious optimism. The downturn is slowing, and first-time buyers are active. However, a high supply of listings and a weak job market continue to be challenges.