Housing market pick-up: Economists predict further gains in 2024

December data from the Real Estate Institute showed prices, sales activity and confidence were all significantly higher than the same time a year earlier. Compared to December 2022, the figures for December 2023 show a 14.1% increase in properties sold across the country. 

The institute’s house price index, which smooths variations in the data caused by changes in the types of properties selling, was up 0.5% from December 2022.

“We’ve been observing slow and steady improvement recently and we round out 2023 with continued improvement in sales activity in the market,” Real Estate Institute chief executive Jen Baird said. 

“Many local agents are reporting signs of growing market confidence and activity levels now that the election is over and the new government has begun releasing details about its plans, and interest rates have stabilised.

“While some buyers and sellers are waiting to see what the new year holds, it’s clear that there’s a growing understanding that the bottom of the market is behind us with annual median prices starting to lift in many regions – its clear more buyers and sellers feel that now’s the time to act.” 

She said the market was moving more quickly than it had been. 

“National median days to sell was 36 days, decreasing by two days compared to last month, and by four days year-on-year compared with December 2022.”

While activity was up, the number of new listings dropped by 6.4% year-on-year. Outside Auckland, the drop was 4%. 

The number of people choosing to sell a property by auction has increased, from 11.4% in December 2022 to 14% of sales. 

Westpac chief economist Satish Ranchhod said the bank was still forecasting a price rise of 8% over this year. 

“Population growth is booming, with net migration running at a multi-decade high of 130,000 in the year to October. Consistent with that, real estate agents are reporting a pick-up in buyer interest and the number of days to sell has continued to fall. In addition, the new Government plans to introduce policies that will help to boost investor demand, such as fully restoring interest deductibility and reducing the ‘brightline’ holding period for taxing capital gains. 

“However, at least for now, high interest rates are still acting as a brake on house price growth. That’s made serviceability tougher for first-home buyers and those looking to upgrade. It also means that net rental yields are still low.”

ASB economists said they too expected house price inflation to gain ground from here but said restrictive interest rates would “keep a lid on how spicy the market gets”.

Interest rates have been a key handbrake on the housing market in recent years. ANZ and Infometrics both updated their official cash rate forecasts in mid-January, joining ASB in predicting an official cash rate (OCR) cut in August. 

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