Our team has returned to the office refreshed and ready to go. We are seeing strong levels of activity across all categories of the real estate market. There are generally three factors that impact real estate – employment levels, interest rates, and immigration numbers – and each is pertinent to review at the beginning of the year.

1. Employment is still at a high level of around 96 percent, albeit softening somewhat from higher levels in 2022. As independent bank economist, Tony Alexander notes in his first market update for the year: “Job growth is likely to remain positive this year and improve over 2025 – so the degree of house buying despondency regarding ability to service a mortgage will be low.”
2. Mortgage rates are still in the mid-range and it looks like we are seeing the very early stages of the mortgage rate ‘tide’ receding – with both Kiwibank and TSB lowering their longer-term fixed rates. The Reserve Bank’s first meeting for 2024 is not until the end of February so we are not expecting any updates regarding the OCR before then.
3. Immigration numbers are still at record levels as migrants seek to make new lives for themselves in New Zealand. The latest figure is that New Zealand recorded a net migration growth of 129,000 new citizens in the year to November 2023. That is a huge number of people looking for somewhere to live when they touch down on our shores..

Additionally, we can look to a new Government focused on rebuilding the economy via several stimulus initiatives. We expect to see some market motivation from the modification of key property policies such as the revision of the bright-line test down to two years and changes to interest deductibility rules.

We are seeing high numbers of homes being booked for our first residential auctions of the year. In the commercial property sector, we anticipate activity beginning to lift steadily as the end of our financial year approaches, and asset owners look to close out their holdings in time to wrap up accounts for the period.

Echoing what the Bayleys Canterbury team are hearing from their respective networks across the province, a survey by the New Zealand Institute of Economic Research (NZIER) reports that economic activity was resilient over the final quarter of 2023.

Significantly fewer firms reported higher input costs during December, compared to the same period the previous year. This bodes well for both tenants in the commercial and industrial property sector, and farmers in the rural sector.

As always, should your browsing of this edition of Selection uncover a fabulous property of interest or appeal, feel free to contact the Bayleys salesperson marketing the property for a chat on how we can assist you. We look forward to working with you.