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NZ Housing Market Finds a Base

NZ Housing Market Finds a Base

A senior economist says sales have lifted off the lows at the start of the year and have now stabilised.

By: Sally Lindsay

15 August 2023

REINZ’s latest data has reinforced that the country’s housing market has found a base, but it’s not roaring away.

On the sales front, a 7.6 per cent drop was evident over the July month. However, that followed a sharp 18 per cent rise in June.

Nationally, house sales lifted 1.6 per cent, to 4,903 last month compared with last year, and were up 10.8 per cent in Auckland. But on a month-on-month basis sales were 15.6 per cent.

Westpac senior economist Satish Ranchhod says smoothing through the normal month-to-month volatility and looking at the longer-term trend in the housing market, sales have lifted off the lows at the start of the year, and they have now stabilised at low levels.

Compared with July last year, sales are up close to 2 per cent. Days to sell remain elevated, consistent with ongoing caution among buyers.

Looking across the country, sales in Auckland are up 11 per cent compared to this time last year, Waikato is up 9 per cent and sales in Canterbury are up 10 per cent. By contrast, sales in Wellington were down 16 per cent compared with July last year.

On the price front, the sharp fall over the past year has been arrested, with the REINZ House Price Index pushing higher over the past few months.

The median sale price dropped 4.9 per cent year-on-year to $770,000 across the country. In Auckland it dropped below $1 million to $990,000.

“Compared to this time last year, house prices are still down 7 per cent. However, prices are now turning upwards again, especially in Auckland where they have risen by about 2 per cent in the past couple of months,” Ranchhod says.  

New listings dropped 17.6 per cent year-on-year, from 7,470 listings in July last year to 6,156 last month, and a 1 per cent decline compared to June from 6,218. New Zealand, excluding Auckland, listings dropped 19.5 per cent year-on-year from 4,778 to 3,847.

 Finding the floor

Following the sharp falls over the past year, the housing market has found a floor. However, with interest rates set to remain at contractionary levels for some time yet, we’re still forecasting only modest house price rises over the remainder of this year, Ranchhod says. 

“We expect to see the housing market heating up again next year, with prices expected to rise by close to 8 per cent over 2024.”

Underpinning that acceleration is the turnaround in net migration and expectations that interest rates are close to a peak.