It is my first hope that this opening message finds you in good spirits, having celebrated the joys of the festive season and welcomed the New Year surrounded by the warmth of family and friends.
Personally, I feel blessed to have embarked on multiple ‘road trips’ – from Auckland to Tairua in the Coromandel, Red Beach on the Hibiscus Coast, and a flight to Christchurch, followed by a memorable road trip from Christchurch via Lake Tekapo to Queenstown. Cycling the Otago Rail Trail with my young family was a highlight, concluding the adventure with 2 days in Dunedin to reminisce about my time as a student at Otago University! The beauty that envelops New Zealand has left an indelible mark, inspiring us to already be planning future excursions.
Returning to the dynamic world of real estate, I am thrilled to report that Goodwins’ Property Management and Sales Teams are back with renewed energy, immersing themselves in a flurry of new business activities. In the past 22 days alone, we’ve successfully completed 47 new tenancies, indicative of a robust demand in the market. The return of multiple film and media studios to Auckland serves as a significant catalyst, providing a welcome boost following the aftermath of the 2023 SAG-AFTRA strike. Additionally, our Sales Team is in the process of launching 5 new listings in 7 days, spanning geographically from the captivating water views in Stanley Point on the North Shore to the leafy city-fringe streets of Epsom.
Navigating the rollercoaster ride of the housing market in recent years, our attention is drawn to the pivotal role played by interest rates. From the record lows in early 2020 that triggered a home-buying frenzy to the subsequent fall in house prices due to inflation-fighting rate hikes, we find ourselves at a juncture where interest rates appear to have stabilized. However, the impact on homebuyers remains significant, with many facing challenges in repaying their home loans, thereby limiting the anticipated surge in new buyers.
Investors are also grappling with cashflow challenges as interest rates continue to affect their returns. The anticipated restoration of interest deductibility on rental properties by National and Act, set to commence in a phased manner from April this year (with a 60% deduction in 2023/24, 80% in 2024/25, and 100% in 2025/26), along with the adjustment of the bright-line test to two years, is expected to bring about positive changes in the market. As wholesale rates trend downward, optimistic projections suggest that the one-year interest rate could reach the low-to-mid sixes by the end of 2024.
Amidst these economic shifts, our population is experiencing rapid growth, with migration contributing significantly to a surge of 118,800 new residents in the past year. This demographic expansion places considerable pressure on the rental market, making housing a top priority for our new arrivals.
Looking ahead, the consensus among New Zealand’s major banks is a continued increase in house prices by 5.20% in the year to December 2024. Independent economist Tony Alexander echoes this sentiment, quoting: “It is not possible to know when the pace of increase in average house prices will accelerate from the average 0.8% a month gain seen since June. But my monthly surveys of real estate agents, mortgage brokers, investors, and consumers should provide some early insight. My current pick for price gains in 2024 is the same as it has been since just before the middle of this year. About 10%. For 2025 there will be extra momentum in the housing market, FOMO is likely to be much higher, and I’d expect gains nationwide averaging closer to 15% then than 10%.”
As we embark on this new chapter, we remain steadfast in our commitment to navigating the evolving real estate landscape and serving you, our valued community, with dedication and excellence.
Wishing you a prosperous and fulfilling 2024!