2023: A year in property news

As a new year looms, you may need a handy recap of the biggest news in property during 2023. 

Overall, the housing market has remained subdued in most regions, but recent reports from real estate experts indicate that things are gaining traction again. Read on to learn more. 

Why OCR increases halted (and what might happen next)

2023 has been another crucial year for our central bank in its fight against high inflation. While the inflation rate continues to be well above the RBNZ’s target range of 2-3%, the economy started to show cooling signs around mid-year.

Following 12 consecutive interest rate increases since October 2021, the Reserve Bank opted to keep the Official Cash Rate steady at 5.5% in July 2023, while signalling that further increases might be unnecessary for the time being.

Since that decision, the RBNZ has maintained the OCR at the same level But that doesn’t mean the war on inflation is over. The prevailing sentiment is that interest rates must stay high for longer, to reduce inflation to a sustainable level. How long, you may ask? There is a debate among economists about the timing of interest rate cuts.

House prices have largely stabilised

According to the RBNZ’s latest Financial Stability Report (published in November 2023), property prices have stabilised and the market has bottomed out in the first half of 2023.  

Notably, between the peak in late 2021 and March 2023, the property market experienced the biggest sales slump in almost 40 years. This downward trend coincided with the quick increase in mortgage rates, with first-home buyers pulling back in droves.

While a big housing market rebound is far from a sure thing in the near future, the second half of the year delivered encouraging results. In September and October, REINZ reported increasing signs that things had turned, albeit slowly. Business journalist Susan Edmunds, in an article published on Stuff.co.nz, recently listed the five key factors behind the change:

  • Migration boosting demand;
  • Looser credit criteria from 1 June;
  • Interest rates (possibly) peaking;
  • Lack of new listings (fuelling competition);
  • Strong labour market.

It remains to be seen how these factors will play out in 2024. The question is, are first-home buyers making a comeback? 

The aftermath of the general election

Housing policies were hot topics in the lead-up to the general election. And as often happens during election years, both buyers and vendors did take a wait-and-see approach. Now that the election results are known, it’s possible that there will be more activity in the property market.

Economists believe that the National Party’s housing policies could drive property prices higher while having minimal impact on interest rates. In particular, the new Government is expected to have more of a property investor-friendly approach than their predecessors, notably with the agreed adoption of ACT’s policy to speed up the rate at which interest deductibility for rental properties is restored.

What will 2024 bring?

No one knows for certain how 2024 will unfold. But you can rest assured that we will be here to answer any mortgage-related questions you might have. Keep us in mind: we’re here to help. 

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.