Kiwibank – house prices up 6% in 2024
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By Susan Edmunds
Surging migration is likely to give more of a boost to house prices than previously expected, Kiwibank economists say.
They have updated their forecasts of economic activity next year and say “massive migrant flows” will add to demand for everything, including housing.
Chief economist Jarrod Kerr said they had previously expected a peak-to-trough decline of 20% but now thought the 17% fall already experienced was as much as was going to happen.
They expect prices to rise about 6% next year.
“The surge in migration and the loss of dwellings at high risk of climate change will only exacerbate the housing shortage.
“The new Government will play a big role. Because the ‘promised’ reintroduction of interest deductibility, shortening the bright-line test timeline, and possible watering down of the CCCFA, will entice investors. Any added infrastructure spend or incentives for new builds will also be welcomed. Interest rates will also play a large role, eventually. We think rates will fall in 2024.”
Data from the Real Estate Institute on Wednesday showed a 0.8% increase month-on-month in the house price index, and a decline of just 0.2% from the year before.
Auckland had its first year-on-year price increase in 18 months in November, Infometrics economists noted.
The number of properties sold was up 15.7% month-on-month and up 12.2% from November 2022.
infometrics economist Sabrina Swerdloff agreed migration was likely to boost the market. She said the sixth consecutive monthly rise in prices recorded in November was proof the market had “well and truly shifted”.
“However, the scope for price growth is still limited by the weakening labour market and persistent affordability challenges.”
Data from Trade Me showed that the national average asking price lifted 0.5% in November compared to October.
“Across some of our smaller regions, we’ve seen the biggest changes. Gisborne has led the way with a 3.5% month-on-month increase, bringing the average asking price up by $20,000 to $627,700,” said Trade Me Property sales director Gavin Lloyd.
ASB economists noted that prices were now about 2.3% above their weakest point. “But still only back to around where they were last November given how modest the recovery has been up until now.”