Over the last quarter of 2023, the New Zealand residential property market has shown encouraging signs of a housing upturn, bringing optimism to homeowners and potential buyers alike. As the market dynamics evolve, several key indicators point towards a positive shift, including a higher number of new listings, increased sales numbers, and a rise in property values. Read on as we explore 5 key indicators that point to a housing upturn and shed light on these promising trends.
More sales listings coming into the market
One of the clearest indicators of a housing upturn is an increase in the number of properties being listed. A higher inventory can be attributed to various factors, including increased seller confidence and a growing demand from buyers.
REINZ chief executive Jen Baird said that while details of the new government were still being finalised, many vendors and buyers showed confidence that it was a better time to sell and a good time to buy. “The increasing number of listings coming to market is showing a slow, but marked, improvement to the past year, and a renewed confidence from vendors looking to sell with more certainty now the election is behind us.”
Less days in market
Another important metric reflecting the health of a property market is the number of days a property spends on the market before being sold. A decreasing average can be viewed as a positive sign, indicating an increase in buyer interest and stronger competition.
According to REINZ Monthly Property Report for October 2023, properties were selling faster, with the median number of days to sell down by 7 days from October 2022 to 37 days.
Increased first home buyer activity
First home buyers play a crucial role in stimulating the property market, and recent trends suggest a notable uptick in their activity. Less competition from other buyers and investors, a significant drop in house prices, and an easing of lending conditions from lenders not meeting mortgage sales targets, are likely contributing to a surge in first home buyers.
Data from the Reserve Bank of New Zealand shows first home buyers accounted for 25 per cent of all property sales in September 2023, while figures from Statista Research Department show first home buyers borrowed approximately NZ$ 1.2 billion in September 2023 for residential mortgages, the highest lending value for first home buyers within the given time period since March 2021.
More interest from property investors
Investors are a key driving force in any property market, and increased interest from this segment indicates a growing confidence in the market's potential for returns, with factors such as favourable rental yields, economic stability, and the potential for capital gains attracting investors.
The residential property market continues to gain momentum, with many real estate agents reporting increased levels of enquiry from both investors and first home buyers. The potential re-introduction of interest deductibility, as indicated by the National Government pre-election, could also result in an even greater influx of investors returning to market.
Property values rising
Finally, one of the most direct indicators of a housing upturn is the appreciation of property values. This rise not only benefits existing homeowners by increasing their equity but also fosters a positive sentiment that encourages further investment and stimulates market activity.
The latest QV House Price Index shows the average home increased in value by 2.1 percent over the three months to the end of October - an improvement on the 0.9 percent quarterly home value increase reported at the end of September - with the national average now sitting at $907,387. It follows three consecutive months of modest growth, including by 0.9 percent last month.
A promising outlook for buyers and sellers
Positive signs of a housing upturn offer a promising outlook for both buyers and sellers alike. For first home buyers preparing to enter the market, there are some steps you can take to prepare. And for property investors looking to buy in this dynamic market, finding the right investment property is key to maximising your investment.
For mortgage advice specific to your unique situation, get in touch with a Mortgage Express branded mortgage adviser.
