July 2024 Update for Norfolk Mortgage Trust Clients.

Market Contraction Continues Amid Economic Headwinds. Norfolk Mortgage Trust Delivers Steady Pre-tax Returns at 7.50%.

As New Zealand’s property market continues to grapple with a challenging economic environment, the news of the Reserve Bank’s decision to lower the Official Cash Rate (OCR) is being met with cautious optimism. This move, aimed at providing some relief to homeowners and buyers alike, is starting to ease borrowing costs a little, even as the broader market continues to experience downward pressure.

Despite this potentially positive turn, the latest data from the QV House Price Index for July 2024 paints a more complex picture. Property values have continued to decline, with an average reduction of 1.9% nationally over the past quarter, a steeper drop than the 0.9% decline reported in June. As market conditions evolve, Norfolk Mortgage Trust remains committed to delivering consistent returns, demonstrating resilience in the face of uncertainty.

In this blog post, we’ll explore the latest market trends and regional performance, drawing on expert insights to demonstrate why Norfolk Mortgage Trust remains a trusted partner for your financial growth.

Key Takeaways:

National Trends:  Ongoing economic challenges continue to put significant downward pressure on the NZ property market, resulting in a 1.9% national decline.

Auckland’s Cooling Trend: Auckland saw a 3.4% drop this quarter, marking six consecutive months of negative growth.

Regional Resilience: Marlborough (0.6%), Invercargill (0.4%), and Queenstown (0.3%) recorded slight increases, offering some positivity amidst the broader market downturn.

Economic Outlook: With the recent OCR cut and the possibility of two more this year, mortgage rates could fall, potentially improving market sentiment and stimulating market activity.

National Overview

The New Zealand property market is experiencing a steady decline, with the average home value now standing at $909,517. This figure represents a 2.3% increase from the same time last year but is only 0.5% higher than at the start of 2024. The market’s ongoing challenges are a reflection of broader economic pressures, including rising interest rates and increasing unemployment.

Regional Performance

Auckland is experiencing the most significant decline, with a 3.4% decrease in home values this quarter, bringing the average home value to $1,238,413. This marks the sixth consecutive month of declining values in the city, highlighting the persistent economic challenges in one of New Zealand’s largest urban centers.

In the Northland region, Whangarei experienced the largest reduction, with a 3.9% decrease, while Kaipara saw a smaller decline of 0.7%. The Far North also recorded a significant reduction of 2.1%. These figures underscore the widespread impact of the economic downturn across the North Island.

In contrast, Marlborough (0.6%), Invercargill (0.4%), and Queenstown (0.3%) showed modest growth, indicating some resilience in specific regions. However, these increases were minor and do not significantly alter the overall picture of a contracting market.

      Expert Analysis

      QV Operations Manager, James Wilson highlighted the market’s ongoing struggles, noting that “residential property values are slowly shrinking across all price brackets in almost every part of Aotearoa.” He attributed this to high interest rates and rising job insecurity, which are deterring both buyers and sellers, leading to a market imbalance.

      However, there is a glimmer of hope on the horizon. Even before it announced it’s drop in the OCR, Mr. Wilson had pointed out a recent shift in the Reserve Bank’s rhetoric had sparked some optimism around mortgage rate relief. This potential relief could help stabilise the market and might even encourage renewed interest from buyers later in the year.

              Looking Ahead: Navigating the Road to Recovery

              As we look towards the remainder of 2024, the recent drop in the Official Cash Rate may provide a modest cushion against the economic pressures currently weighing down the New Zealand property market. With banks already starting to lower their mortgage rates and with the potential for two more rate cuts later this year, there could be a shift in market sentiment that opens new avenues for growth.

              Consistent Returns with Norfolk Mortgage Trust

              At Norfolk Mortgage Trust, we recognise the challenges and opportunities that come with these shifts in the market. Our commitment to providing stable, competitive returns—currently at an annualised pre-tax rate of 7.50% p.a.—remains unwavering. As always, we will continue to adapt to these changing conditions, leveraging our expertise to navigate this complex landscape and ensure our investors’ portfolios are well-positioned for both the current environment and the potential market recovery on the horizon.

              Final Thoughts

              The New Zealand property market is undergoing a period of contraction, but with Norfolk Mortgage Trust, your investments are in capable hands. Our expertise, commitment to data-driven decision-making, and consistent returns make us the ideal partner to help you navigate these challenging times.

              If you’re looking for a stable and trustworthy investment option, consider Norfolk Mortgage Trust. Our proven track record and reliable returns speak for themselves.


              Watch our short video to learn more about how the Trust works and what you can expect from your investment.

              For more information and the opportunity to discuss Norfolk’s approach to lending contact Norfolk Mortgage Trust today.

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