Insights and Predictions for the 2024 Real Estate Market.
Interest rates, property values, immigration, and a new property cycle all factor into how the market is travelling. Below are 5 top insights and predictions for 2024 to help you get ahead of the market.
1. Mortgage rates may well drop around August - As the Reserve Bank remains wary of inflation, which currently exceeds its mandated range of 1-3%, economists anticipate a drop in the Official Cash Rate (OCR) in mid to late 2024, potentially around August. It is likely that when this occurs, it may be sudden and without much warning to maximise the deflationary impact of its current high level.
2. Property values are expected to stay stable - History shows that the one-year interest rate plays a pivotal role in driving the property market and the sweet spot for increased activity and growth in value sits under 6%. Currently hovering at 7.2%, affordability remains a challenge for buyers, limiting their ability to borrow. Consequently, the market is expected to remain stable in 2024, and if we continue to see listing inventory rise, this may create a drop in prices as there are more properties available.
3. Increased activity from Immigrants - The country saw record high immigration numbers in 2023 and this will have a flow on effect on the property market over the coming years. This influx has placed added strain on rental accommodation as new immigrants have settled in the country. We know from experience that it typically takes immigrants one to three years to establish themselves and buy property. These new residents are likely to show activity in mid-priced properties, stimulating demand.
4. Consider new homes - The new build market is expected to flourish in 2025. With experienced developers purchasing sections around the Hutt Valley in recent years, they are building homes to take to the market in the next 12-18 months. However, with developers concentrating on their own builds that are in progress, now could be one of the best times to purchase a section yourself and build your new dream home. Despite media reports of some building companies closing up shop, many builders are still active and foresee renewed activity in the new build market from 2025 onwards. Now is the time to explore new build opportunities.
5. The property cycle is entering a new phase of growth - Historical trends suggest that as mortgage rates decline, property prices and values tend to increase. Currently, prices are stable but are likely to be at the lowest they will be for the next 5 - 7 years. Therefore, if you're considering upgrading your home or buying your first home, now could be the best opportunity for some time.
