Market Update: September 2023

Auckland’s housing market is turning in time for the traditionally busy spring season, with prices climbing in seventy-six suburbs in the past three months. City prices spent more than a year tumbling from record-high values in late 2021 and are now beginning to rebound.

While homeowners will be happy with the news, those wanting to enter the market may find rising prices an additional hurdle as buyers already grapple with soaring interest rates.

New Zealand’s median house price took a more than $150,000 dive during a 15-month slowdown after the market peak in November 2021. Kerikeri’s median prices continued to climb until third quarter 2022 and the house price index for the Bay of Islands ward has now come back around 10 to 15% off the peak.

The latest data from analysts CoreLogic gives the best indication that a rebound is now under way, chief economist Kelvin Davidson said. “Back in June, 71 suburbs had recorded a rise of at least 0.5 per cent in the previous three months. But spring forward to September, and that count has risen to 188,” Davidson said.

Kiwibank chief economist Jarrod Kerr said the housing market was likely to pick up again now interest rates appeared unlikely to climb higher and migration had surged. “Putting a stake in the ground, saying this is the bottom [of the market], I think we can do that now,” he said.

About 100,000 more people arrived in New Zealand over the past year than left. And while New Zealand had been in a building boom in recent years, construction had cooled in the past 12 months because of high building costs and falling house prices, Kerr said.

“Every migrant that comes here either takes a rental or looks to buy,” he said. “So, we are going back into a situation where demand and population growth is outstripping supply. That is not good for affordability, it is not what we need, but that puts upward pressure on prices.” If the Reserve Bank begins lowering interest rates next year, that could further boost prices, he said.

Stabilizing interest rates and strong net migration have long been key lead indicators of a market set to rise. Declining interest rates, whenever they come, are sure to push prices back up if accompanied by continuing population growth pressures from net migration. Generally, migrants seek jobs in the cities and once in a position to buy after their stand down period, can displace current city dwellers to the provinces. Strong migration from places like Auckland, Wellington and even Christchurch has led to Kerikeri’s extraordinary growth.

A total of seventeen sales completed in Kerikeri during August down around 30% from July and about 40% from a year ago. Four of these were lifestyle blocks sold in late 2021/early 2022 which have been waiting for titles to come through. That is running a little under the monthly average of sixteen sales for the last 3 months. 

The election still has many people sitting on the fence whether selling or buying. Policies outlined by National, if put in place, could have significant impact on the feasibility of property investments versus other investment types and could open the higher end of the market to overseas buyers from countries other than Australia and Singapore.

For our part we are gearing up for a busy summer by expanding our sales team, appraising properties, and advising vendors on how to get the best prices. It feels like the market is a coiled spring and we want to be prepared for the bounce back. Wayne at the head of our commercial arm continues to build momentum and offer advice to those looking to buy, lease or sell in the commercial and horticultural sectors. Pop in for a coffee and a chat or give any one of our team a call for free friendly advice. 

Follow these links for more information on the outlook for the property market and the economy. 

Economists see 'signs of further strength to come' in housing market

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