Understanding property trends is important if you are thinking about buying, selling or renting, but it can be challenging trying to keep up. 

Whether you're a seasoned investor, a first-time homebuyer, or someone exploring the rental market, the key is to stay informed so you can make the best decisions possible.

As someone who has been in the real estate field for a while now, I've had to observe and navigate the ever-evolving landscape over the years. I've learned what's important and which trends can significantly influence the property market, and from this experience I'd like to share with you what you can expect in 2024.

Let's dive into the world of property, where knowledge is your greatest asset!

More investors in the housing market

Big news for potential property investors in 2024! 

The new government announced pre xmas that key changes will be made to the brightline rules, which will start from the 1st July 2024. The new rule allows homes to be sold to be free of the bright line tax after two years instead of the previous ten. This change is expected to make the property market more appealing to investors.

Another significant change is tax deductibility on interest which results in 80% being phased in by the 1st April 2024, and the balance next year. 

With the likely increase in investors it may affect first-time buyers, who have had an easier time in the housing market without as much investor competition. 

Availability

New Zealand has seen a significant population shift, with approximately 30,000 people leaving the country, but 150,000 coming to New Zealand over the past year, leaving a net total of approximately 120,000 people by the end of November 2023. This has created a demand surge in the rental and property market, and will continue into 2024.

Of note, at the end of 2023 the new government signalled a warning that this is not sustainable, so expect some moderation in next year's net migration figures. 

For individuals, first home buyers, and investors considering property investments, this trend suggests a steady growing market, with several economists picking growth this year at around  6% to 10%. The level of growth will also depend on your region. Additionally, for renters, it's wise to anticipate potential increases in rental prices so maybe a good time to explore home ownership options proactively to secure property amid heightened demand.  

Retirement 

Over the past 30 - 40 years, Central Otago has seen a significant increase in its retiree population. With one of the highest populations of people aged over 65 in the country, many baby boomers are opting to downsize or move into retirement villages as they enter their golden years. 

The availability of many new retirement villages in the Central Otago and Lakes District have made it possible for people to move easily to retirement villages earlier than they would have before and notably not move away from the area through lack of good retirement village options.

One notable local development in this regard is the beginning Stage Two of the Aurum retirement village in Clyde. This expansion will provide even more local homes for sale as more people move into these retirement villages.

While it is great for locals, it is also appealing to those outside of the region. The increase in inquiries from outside Central Otago, including individuals from Dunedin, Invercargill, and even the North Island, suggests that more people are considering retiring in this region. The appeal of the beautiful landscape and peaceful lifestyle that Central Otago offers is drawing retirees from all over the country. Many people are starting to invest into Central Otago with the mind to retire later - getting their foot in the door while they can. 

Interest Rates

Good news for those looking for home loans! Banks are starting to reduce interest rates on various terms, providing borrowers with more confidence. Potentially resulting in reduced rates at the end of 2024 and early 2025. 

As an example Kiwibank recently reduced interest rates for the two-year term from 7.05% to 6.89%, the three-year term decreased from 6.89% to 6.75%, the four-year term decreased from 6.79% to 6.69%, and the five-year term decreased from 6.79% to 6.59%.  

This downward trend in interest rates will give a massive amount of confidence to those borrowing money, as people feel that mortgage rates have peaked, and are now looking to lock in a good rate going forward. 

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Sections and Lifestyle 

In recent years, the property market has undergone significant changes, and these trends are expected to continue into 2024. Specifically, the past six months have seen a slowdown in new property development due to the escalating costs of building materials over the past two years, and land and section values increasing by 100% - 300% over the last four years. 

This has resulted in people shifting their focus from building their own homes to buying existing properties. The increase in existing-home sales with the lack of new builds has put additional pressure on the existing housing stock, leading to increased demand and will potentially drive up house prices.

Given the increased demand for existing housing stock, consider working closely with real estate professionals who can provide insights into upcoming listings and potential opportunities. Be open to exploring neighbourhoods that may not have been your initial focus, as this flexibility could lead to more favourable options. Affordability has driven many buyers down river and the Omakau and Roxbrough areas are becoming more attractive.

Rentals 

Over 2023 and into 2024, the rental market had continued experiencing significant changes and trends. 

One notable trend that has emerged in recent years is the continued high demand for rental properties across Central and Lakes and a substantial increase in rental prices. Over the past three years, the value of renting a property has gone up by 40% - 50% on average.  

This increase in rental prices can be attributed to several factors, including changes in government policies. Changes in tenancy rules, tax deductibility, and the bright-line test have scared off many investors from the rental market. We may see a further reduction in rental stock with new tax benefits of selling earlier. 

Of note, rental accommodation in Alexandra and Clyde are catching up to similar prices that you would find in Cromwell, where they used to be around $450 for an average three bedroom home and now the market is closer to $600 - $650. 

This is due to the continued lack of affordable housing options in the Lakes region (Wanaka and Queenstown), requiring more workers to commute from nearby towns such as Cromwell, Alexandra, and Clyde. This further exacerbates the demand for housing in those areas, potentially driving up prices and limiting availability.

So that's a glimpse of 2024...

As you can see the property market is ever-evolving and influenced by numerous factors. As we look ahead to 2024, several market trends are expected to shape the industry, which will affect everyone at any stage of their property journey. While I've mentioned a few, there are many ways to avoid some bumps and potholes in the property market so if you are thinking about making a change feel free to contact me.