According to REINZ’s latest data, December was a “solid close to a strong year” for the New Zealand property market. But real estate agents across the country are also seeing signs of a gradual slowdown.
Read on to learn more about what’s happening in this space.
December rounding off a strong year
Year-on-year price growth continued in December 2021, with median residential property prices rising annually by 21.5 per cent (from $745,000 to $905,000). However, the monthly price growth rate was only 1.6 per cent – a sign of deceleration compared to previous months.
At a regional level, seven regions achieved record median prices, namely:
- Northland (up 13 per cent year-on-year to $760,000);
- Bay of Plenty (up 27.8 per cent YOY to $920,000);
- Gisborne (up 17.8 per cent YOY to $695,000);
- Manawatu/Whanganui (up 23.2 per cent YOY $647,000);
- Tasman (up 25.2 per cent YOY to $920,000);
- Nelson (up 23 per cent YOY to $830,000);
- Southland (up 21.3 per cent YOY to $455,000);
- Wellington (up 24.2 per cent YOY to $1,000,000).
Signs of deceleration
“While the market remains confident, the impact of rising interest rates, tighter lending criteria and changes to investor taxation restrictions are starting to shift dynamics,” said Baird in commenting on emerging market headwinds.
Interestingly, the number of sales across New Zealand decreased 29.4 per cent year-on-year and was also down 21.4 per cent month-on-month. Real estate agents in several regions reported a falloff in buyer numbers, especially first-home buyers. And according to Baird, this may be due to changes to the Credit Contracts and Consumer Finance Act (CCCFA).
The new requirements, introduced on 1 December to protect vulnerable borrowers, are making bank assessments of borrowing capacity more prescriptive. “Over 2022, the impact of these changes and anticipation of further interest rate increases are likely to play out in the market, leading to a gradual slowdown in the pace of price growth,” Baird said.
“Realistic pricing will prevail in 2022”
What’s next for the housing market? As always, there’s no crystal ball to accurately predict the future, but based on the current environment, most economists and property analysts expect a dampening on price pressures in 2022.
With more sellers being active in the market (the number of available properties increased by 28.7 per cent YOY in December), buyers are starting to have more choice. As a result, according to QV Operations Manager Paul McCorry, a decline in the quarterly rate of growth is already in progress.
“If we had to draw a line in the sand, you could reasonably expect value growing in the smaller single digits towards the middle of the year and potentially remaining stable throughout winter, but 12 months is a very long time in a property market and realistic pricing and realistic vendors will prevail in 2022,” McCorry explained.
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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.