Source: Cotality
New Zealand’s residential property market is worth $1.66 trillion and accounts for almost 50% of household assets, highlighting the enormous role housing plays in household wealth, even as sales activity and property values remain subdued.
New data from Cotality puts the scale of New Zealand’s residential real estate market at $1.66 trillion across 1.74 million dwellings. That compares with $345 billion in commercial real estate, $252 billion held in NZ Super and KiwiSaver, and $190 billion in listed stocks.
Outstanding mortgage debt totals $404 billion, while $78.1 billion worth of residential property has changed hands through 87,920 sales over the past 12 months.
Yet despite the sheer scale of the country’s residential property market, Cotality Chief Property Economist Kelvin Davidson said current market conditions remained subdued.
“Residential property remains an enormous part of New Zealand’s household wealth, which puts the significance of even relatively small shifts in the housing market into perspective.
“But scale shouldn’t be confused with momentum. The market itself remains subdued, with buyers and sellers still cautious, sales activity soft and property values continuing to edge lower.
“There’s still plenty of choice for buyers, which is giving them negotiating power. At the same time, most vendors aren’t in a position where they’re being forced to sell, and that’s helping to contain the rate of decline in property values.”
National property values were down -1.3% in the year to September and also fell -1.3% across the three months to September. The national market remains more than 18% below its previous peak.
The national figures, however, mask increasingly varied conditions across the country. Auckland property values were down 3.2% over the year to September, while Christchurch recorded annual growth of 3.4%.
“There’s no single story across New Zealand at present. Some markets are proving more resilient while others remain under greater pressure, but nationally we’re still seeing a fairly subdued picture.”
September recorded 6,519 property transactions across New Zealand, around 14% fewer than the same month last year and marking the ninth consecutive year-on-year decline. High levels of available stock are continuing to give buyers significant pricing power.
At the same time, mortgage rates have begun moving higher. One and two-year special fixed mortgage rates stood at 4.97% and 5.27% respectively in September, compared with an average rate of 4.80% currently being paid on existing fixed mortgages.
“For now, the market looks more like a period of consolidation than the beginning of another significant upswing. Housing remains an extraordinarily important store of New Zealand household wealth, but the conditions for renewed momentum aren’t yet firmly in place.”
“All eyes will be on the next OCR decision on Wednesday 28th and of course the election shortly after. Property investment remains challenging at present, but some would-be investors will be buoyed by Labour’s commitment to 100% interest deductions and now ACT’s proposal to remove tax ring-fencing for property losses.”