2023 Review & 2024 Prediction (2/2)
The property market saw massive changes last year, and it is expected some highs and lows in 2024 as well. 2024 started with a new coalition government that adjusted some legacy labour government laws in the first 100 days. In general, the property market situation is expected to change. No need to say CHANGE create opportunities for people who are in the market, ready and know what going to happen. Let’s start with predictions for the next 12 months:
- Interest rates: OCR is 5.5% and one-year fixed rate is early 7%. I am expecting the rates to remain in the same range (+/- 0.75%) till the end of the year. No big reduction or increase will happen.
- Access to money – DTI: Access to money will be limited by DTI rules from mid-2024. This will not impact FHB purchasing power but it will limit investors access to money. This may create urgency before and slow down after implementation but in general limited impact on FHB who are the most active buyers in the market.
- Bright Line test: The coalition government promised to reduce the bright line test to 2 years from mid-2024. While details are not clear but this will not motivate investors to buy or sell significantly.
- LVR (Loan to Value Ratio): RBNZ gave the signal that they will reduce LVR in parallel of introducing DTI. While details are not clear but this will not motivate investors to buy and there is limited impact on FHB.
- Rent: Considering borders are open more tourists, work, residence & student visa holders are coming to New Zealand and need homes for rent, and considering inflation, interest rate tax deductibility & higher interest rate will push rent significantly higher.
- New build properties: With the increasing cost of build and limited new projects due to finance for developers, new build property prices will increase more than existing properties.
- Property price: The above factors bring stability to the property market in a range of a 6~9% increase by the end of 2024. In general market is under monitor by buyers and sellers to find out opportunities.
- RMA change: And finally RMA changes will be impacted by new coalition government decisions. Then stay tuned for opportunities in this space.
If you missed opportunities in 2023 then DON’T miss limited opportunists in 2024. My clients are still buying bargains. If you are planning to buy or invest in property let’s have 30 minutes catch up and finally any questions about how these impact the property market contact me here.