Winter Brings Cooldown to NZ Property Market. Norfolk Returns Stay Strong at 7.50%.
The latest QV House Price Index for June 2024 reveals a deepening chill settling over the New Zealand property market, with prices dropping by 0.9% in June 2024. This accelerated decline compared to May’s figures suggests a market wrestling with economic challenges and seasonal slowdowns.
Yet, amidst this cooling landscape, savvy investors are finding attractive opportunities for stable returns. Notably, Norfolk Mortgage Trust is offering a consistent monthly income with a competitive 7.50% p.a. return for June 2024.
This contrast between a cooling market and promising investment options raises intriguing questions: What’s driving the property market’s downward trend? And what does the future hold for the housing market?
In this blog post, we’ll delve into these questions but first here are the key takeaways:
National Trends: The national property market remains flat as it finds its balance amidst economic pressures, with a slight decline and regional variations.
Auckland’s Cooling Trend: Auckland led the decline with a 2.6% decrease this quarter, marking five consecutive months of negative growth.
Regional Resilience: Marlborough (0.9%) was the only main urban area with an increase in home value growth. Invercargill (1%) and Dunedin (1.3%) also recorded modest gains.
Regulatory Changes: New debt-to-income restrictions and eased loan-to-value ratios are in place, but their impact is yet to be felt.
Market Sentiment: Many potential buyers and sellers are in “hibernation” waiting for economic conditions to improve. First-home buyers could see this as a window of opportunity.
Spring Forecast: A cautious spring bounce back is possible, however much will depend on the broader economic climate and how mortgage rates resolve.
National Overview
The average home value stands at $916,285, reflecting a 2.8% increase from last year and a 13.9% decline from its peak in late 2021. This adjustment indicates a market in search of equilibrium amid economic challenges.
Regional Performance
Auckland led the decline with a 2.6% drop, marking its fifth consecutive month of falling home values. Tauranga’s average home value decreased by 1.3%, continuing its downward trend. Wellington also experienced a decline, with home values dropping by 1.2% this quarter. Christchurch saw a more modest decrease of 0.9%, reflecting the overall cooling trend in the housing market. These regional performances highlight the ongoing challenges faced by New Zealand’s major urban centers.
Expert Analysis
James Wilson, QV Operations Manager, highlighted the market’s current challenges, including high mortgage rates and economic difficulties, which are deterring potential buyers and keeping many in a wait-and-see mode. Despite these challenges, some regions, particularly in the South Island, are showing resilience.
Regional Highlights
- Northland: Mixed results with slight increases in Kaipara (0.8%) and decreases in Far North (-0.1%) and Whangarei (-0.6%).
- Taranaki: Significant reductions in Stratford (-5.1%) and South Taranaki (-4.4%), with modest declines in New Plymouth (-0.8%).
- Hawkes Bay: Stable with small increases in Napier (0.4%) and Hastings (0.9%).
- West Coast: Minor reductions overall, with some growth in Grey District (1.1%).
- Queenstown: Queenstown’s home values remained flat with a marginal 0.1% increase.
- Otago: Otago’s overall growth was 0.7%, with Dunedin’s home values increasing by 1.3%.
Consistent Returns with Norfolk Mortgage Trust
Despite the softer property market, Norfolk Mortgage Trust offers a stable income stream with competitive monthly returns. Our current rate of 7.50% p.a. (to 30th June 2024) provides a stable path to grow your wealth. Our experienced management team is dedicated to navigating these market conditions to deliver consistent results for our investors.
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.
Data Source: QV House Price Index for June 2024