Mortgage interest rate cuts, decreasing inflation, and speculation about the Official Cash Rate dropping sooner than initially signalled may be bringing midwinter economic optimism for many, but it is hard to see signs of this in the Kiwi property market.

With a 31% surge in new listings year-on-year in July, the market is evolving, even as the pace of sales moderates and regional price fluctuations continue in July. Although it's too early to see a steady new direction, the latest report from realestate.co.nz highlights several promising trends[i].

Ian Keightley, Operations Manager of Raine & Horne New Zealand agreed, adding that many factors could underpin July market volatility, including recent regulatory change, and urged consumers to remember that not every property transaction is impacted by interest rates.

“Many New Zealanders buy and sell properties simply because they have saved enough for a deposit and want to get into a first home, have growing families, are switching jobs, are empty nesters who no longer need larger houses, or simply desire a lifestyle change. None of these decisions are influenced by interest rates.”

In July, average asking prices in several regions across the motu saw increases. Central Otago/Lakes District average prices were up 11% month-on-month, Coromandel prices increased 5.4%, Gisborne prices jumped 12%, and Marlborough average prices increased 7.2% month-on-month. In contrast, Central North Island fell - 4% month-on-month, Hawkes Bay was down -5.2%, Nelson down - 3.8%, Northland down - 8.4%, and the West Coast plunged -12.3% month-on-month.

According to realestate.co.nz, Gisborne’s average asking price reached $710,960 in July, marking the first time it has been above $700,000 since March 2023.

The growth of townhouses

In other news, CoreLogic reports[ii] that townhouses have become a key component of growth for NZ’s housing market, accounting for 45% of all new dwelling consents across Aotearoa lately, compared to just 6% back in 2012.

Of the 39,600 townhouses built across the motu since 2016, nearly 25,000 have been in Auckland. Key Auckland sub-markets including Waitakere and Manukau have seen townhouse stock increase more than 50% since 2016. Interestingly, Christchurch still has a higher share of townhouses (nearly 24%) than Auckland (16%)**, but the latter’s growth in the past 7-8 years has been more significant. 

Kelvin Davidson Chief Property Economist at CoreLogic says, “It’s always a little difficult to disentangle supply from demand as the most important driver for the rise of townhouses; did tastes change and developers respond, or have buyers just had to purchase what was available?

“In reality, it’s likely to be a bit of both, but certainly buyers can access at a lower price point than other dwelling types. For example, our latest median value for Auckland flats and townhouses is around $775,000, versus the figure for houses of about $1.12m.”

Kelvin sums up, “Overall, it’s clear that townhouses are now a more prominent feature of NZ’s housing market, especially in the largest cities. Given they use land well and can be built close to existing infrastructure such as transport links, they provide a different and cheaper option for a wider range of property buyers.”

Whether you want to sell or buy a property, don’t hesitate to contact your local Raine & Horne office.

[i] https://news.realestate.co.nz/blog/new-zealand-property-market-2024-july

[ii] https://www.corelogic.co.nz/news-research/news/2024/whats-behind-nzs-townhouse-boom