May ’24 NZ Property Market Snapshot & Insights for Norfolk Mortgage Trust Clients.

May NZ Property Market Softens

The New Zealand property market continues to evolve, offering a mix of opportunities and challenges for investors and homeowners alike. While the latest QV House Price Index for May 2024 indicates a slight national dip of 0.2%, the market remains dynamic, with regional variations and emerging trends shaping the landscape.

Key Takeaways:

National Fluctuations: The first quarterly home value reduction since July 2023 is a modest one, highlighting a market that’s finding its balance amidst economic pressures.

Auckland’s Steady Decline: Auckland experienced a 1.4% decrease this quarter, a trend seen in other major urban areas like Wellington and Tauranga.

Regional Resilience: Invercargill, Rotorua, Christchurch, and Dunedin bucked the trend with notable quarterly gains.

Regulatory Changes: Upcoming changes like new debt-to-income restrictions and loosened loan-to-value ratios are expected to influence the market further.

Market Mood: While sellers may feel a slight pinch, buyers, especially first-home buyers, could see this as a window of opportunity.

Winter Forecast: The market is expected to remain flat or gently soften throughout the winter months, with mortgage rates as the dominant restraining factor.

National Overview

The average home value now stands at $923,713, marking a 3.9% increase from the same time last year, and a 13.2% decrease from its peak in late 2021.

Regional Performance
  • Auckland: Led the declines with a 1.4% decrease, continuing a four-month streak of negative growth.
  • Wellington: Experienced a 0.3% reduction, the first since the end of last winter.
  • Invercargill: Showed the most significant growth at 3.2%, followed by Rotorua at 2.5%, Christchurch at 1.4%, and Dunedin at 1.9%.
Expert Analysis

James Wilson, QV Operations Manager, noted that the housing market is largely stalled, with neither buyers nor sellers showing significant movement. This stagnation is influenced by difficult economic conditions and an oversupply of housing stock, which continues to apply downward pressure on prices.

Regulatory Changes Impacting the Market

Several regulatory changes are set to affect the property market this year, including:

  • Debt-to-Income (DTI) Restrictions: Effective from 1 July, limiting the amount of debt borrowers can take relative to their income.
  • Loan-to-Value Ratios (LVRs): Loosening of these ratios will provide some relief.
  • Bright-Line Test: Shortened to two years, potentially increasing the number of listings on the market.
Regional Highlights
  • Northland: Home values increased slightly in Whangarei and Kaipara but decreased in the Far North.
  • Auckland: Continued decline in property values with a significant 1.4% drop this quarter.
  • Tauranga and Waikato: Both regions saw modest declines, indicating a cooling market.
  • Wellington: Small reductions in home values, with the Kapiti Coast bucking the trend with positive growth.
  • Nelson: Slight decline in home values, a first since last year.
  • Canterbury and Otago: Both regions showed slow but steady growth, reflecting a more stable market.
Consistent Returns in a Soft Market

While the property market may be soft for the foreseeable future, Norfolk Mortgage Trust continues to offer a consistent income stream with competitive monthly returns.

Our current rate of 7.50% p.a. (to 31st May 2024) outperforms bank deposits, providing a steady path to grow your wealth even in uncertain times.

Our experienced management team is committed to navigating these evolving market conditions to deliver consistent results for our investors.

Watch our short video [click to view] 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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