Buying guide
Will NZ house prices crash? A 2024 property price forecast
We’ve got the answers to the million dollar question.
Last updated: 18 January 2024
NZ property prices skyrocketed in 2020 and 2021. Since those record breaking increases, the market’s lost its momentum and prices fell and then plateaued.
It’s been a rollercoaster ride - and now all eyes are on the future from 2024 and beyond. Will the NZ property market crash? And if not what are the experts predicting?
Will the NZ property market crash in 2024?
A housing crash is a sharp decline in real estate values that usually follows a period of high house prices. It’s unlikely that this will occur in NZ in 2024 for a few simple reasons.
Housing crashes are generally caused by recession, high interest rates or tightening credit conditions (which make it more difficult to get a home loan). While the economy may be slowing, interest rates are expected to begin decreasing from as early as late 2024 and credit conditions are not expected to tighten. Other factors are also contributing to housing demand, which should help buoy prices.
If the market’s not going to crash, what’s going to happen? Here’s what the experts think.
NZ property market predictions 2024
Rather than a crash most experts are forecasting a gentle recovery for NZ house prices. In fact, six of the country’s leading financial institutions have forecast an average house price increase of 5.6% in 2024.
- ANZ: 4% increase.
- Westpac: 8% increase.
- BNZ: 2.6% increase.
- ASB: 7-10% increase.
- Kiwibank: 6% increase.
- Treasury: 5.3% increase.
In a January 2024 forecast, Mark Smith, Senior Economist at ASB, also added that the bank expects prices to pass their previous record high by mid 2025. A separate poll by Routers of 11 top economic analysts made similar predictions, forecasting a 5% average price increase in 2024 and a 6% average price increase in 2025.
House prices are excpeted to increase in cities all over NZ in 2024.
What will cause NZ property price increases in 2024?
There are several factors contributing to rising house prices in 2024, according to NZ economists. They include: :
- Population growth. In 2023 ASB estimated that the NZ resident population increased by 150,000, or roughly the population of Dunedin. This will boost demand for housing which should help buoy prices.
- Decreasing interest rates. Interest rates may start to decrease in 2024, which should place upward pressure on house prices.
- Investor-friendly policies. The National/ACT/NZ First government is reducing the bright line test to two years from 10, reinstating mortgage interest deductibility and 90-day no-cause termination for tenancies.
- Slowing rates of construction. Residential construction continued at elevated levels in 2023 but is set to slow in 2024 as indicated by building consents data in 2023.
As inflation slows, NZ households may have more disposable income, which could also help put upward pressure on housing demand. With that said, it’s not all roses. Affordability is still stretched, the economy is cooling and unemployment is expected to increase - all of which could have a chilling effect on house prices.
Economists are often wrong
Forecasts, even from our leading economists, are frequently wrong. For example, in April 2020 ANZ was forecasting a 15% drop in house prices that year, while Kiwibank expected a 10-20% dip (instead they increased by almost double that amount).
The point is, no one can tell you with any certainty what’s going to happen next for the New Zealand property market. There are simply too many variables. So take these forecasts with a grain of salt, buy property at a time that suits you and always seek financial advice if you’re unsure.
*We hope this article has provided some helpful information. It's based on our experience and is not intended as a complete guide. Of course, it doesn’t consider your individual needs or situation. If you're thinking about buying or selling a property, you should always get specific advice.
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