The real estate market in New Zealand is witnessing a surge in property transactions as signs of stabilized interest rates prompt more buyers to reenter the market. According to data from the Real Estate Institute of New Zealand (REINZ), the median time to sell a house in December was 36 days, marking the shortest duration since March 2022 and a significant decrease from the peak of 60 days in February last year.
House prices in New Zealand are rebounding following a prolonged decline coinciding with a sharp increase in mortgage interest rates. December recorded a 0.5% year-on-year price increase, marking the first annual gain since June 2022, as reported by the institute.
This recovery aligns with expectations that the Reserve Bank may have concluded its series of interest rate hikes. The warmer spring weather, which traditionally stimulates buyer interest, has further contributed to the revival of demand. Additionally, the success of center-right parties in the October election, advocating for the reinstatement of tax breaks for landlords, has fueled buyer enthusiasm.
While the Reserve Bank of New Zealand (RBNZ) has projected no cuts to the Official Cash Rate (OCR) until 2025, investors anticipate a potential earlier loosening of policy due to a cooling economy. There is a prevailing expectation that the benchmark OCR will drop to 4.5% by the end of 2024, down from its current level of 5.5%.
There are preliminary indications that mortgage rates may be nearing their peak, with two-year fixed-term products priced at 6.89% across major lenders, compared to over 7% in November.
Jen Baird, Chief Executive of REINZ, highlighted positive signs of growing market confidence and activity. She attributed this resurgence to the release of details about the new government’s plans and the stabilization of interest rates. Baird emphasized that more buyers and sellers are feeling motivated to take action in the current market environment.
December saw a 14% year-on-year increase in house sales, according to the institute. However, the stock of available houses for sale at the end of the month witnessed an approximately 11% decline from November, indicating a slowdown in listings.
Baird explained, “The listings figure is likely to reflect some vendors taking a wait-and-see approach and holding off until the new year. Local salespeople are getting strong levels of enquiry from potential sellers, so we expect to see listings across New Zealand lift in the next few months.”
