Navigating change in 2024 : Expert insights & opportunities
Tony Alexander Independent Economist Speaker and Writer
Kelvin Davidson Chief Property Economist CoreLogic New Zealand
For more than 18 months , it ’ s been a white-knuckle ride for homeowners and those eager to dip their toes into the residential market , with a variety of economic factors influencing property prices , buyer sentiment , and the opportunities available to us .
As we move through this volatile year , it ’ s evident that both challenges and opportunities remain for those looking to buy or sell . With insights from two leading market experts – Kelvin Davidson of research firm CoreLogic , and independent economist Tony Alexander – we ’ ll unpack the latest market developments and explore why now might be a prime time to make your move .
Despite this , he predicts the latest move will fuel buyer confidence in the housing market , as lower mortgage lending rates will make home ownership more accessible than it has been in several years . He cautions , however , that while the housing market may see an uptick in activity , broader economic growth may lag behind .
“ Buyers will feel more confident to return to the market , property enquiries will pick up , FOMO ( Fear of Missing Out ) will recover more than it has , and vendors will feel more emboldened to hold out for the price they dream they can get rather than the one which allows them to move on with their lives straight away .
UNDERSTANDING THE CURRENT CLIMATE
Everyone ’ s talking about it – the recent decision by the Reserve Bank of New Zealand ( RBNZ ) to cut the Official Cash Rate ( OCR ) by 0.25 per cent to 5.25 per cent marks a significant shift in monetary policy .
According to CoreLogic New Zealand ’ s chief property economist Kelvin Davidson , this move , though somewhat anticipated , reflects the broader economic weakness and the near-target inflation rate . “ The RBNZ ’ s forecasts suggest the recession will last awhile longer yet , with modest growth in house prices anticipated only in the next year or so . Despite this , mortgage rates are likely to continue their downward trend , offering some relief to households .”
Independent economist , speaker and writer , Tony Alexander echoes this sentiment , noting that the RBNZ ’ s unexpected rate cut underscores the challenges they face in balancing inflation control with broader economic stability .
“ But , we aren ’ t talking about a boom . Net migration is dropping away fairly sharply , and young Kiwis ( potential home buyers ) are leaving the country . Job security feelings will remain weak well into 2025 , and it will take quite some time for the business community to feel the effects of lower household debt servicing costs ,” he says .
AFFORDABILITY IS A DOUBLE-EDGED SWORD
Affordability remains a key concern for many potential house hunters . CoreLogic ’ s latest affordability report reveals that while some measures have recently improved , the overall purchasing landscape remains challenging .
Davidson points out that the median property value is now nearly 7.7 times the gross annual median household income – which is the lowest level since early 2020 . However , mortgage payments as a percentage of income remain high and close to the peak levels seen in 2007-2008 .
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