The last couple of years have really put economists to the test – how do you predict property trends in these turbulent times? It’s worth noting, though, that these experts have had the whole pandemic to finesse their approach – and there’s now a general consensus on what direction New Zealand’s sizzling-hot housing market will take in 2022. Read on to find out more.

Before looking ahead, let’s look back on 2021. For the first time ever, the average house price in New Zealand exceeded $1 million, according to property data specialist, CoreLogic. This was driven by a high demand in residential properties, which saw an annual market growth of 27.4% – breaking the previous record, set in 2003, by 3%.

So, where does that leave us now? While prices are still high – peaking at 28.8% growth in late 2021 – the last couple of months have seen a slight dip. This, coupled with a decline in auction attendance and open home visits, is a sign that after a fiery few years, the housing market might just be cooling off – or at least that’s what the experts think.

In fact, all the major banks forecast a modest decline in house prices – with discrepancies lying more in just how modest this decline will be. BNZ economists are anticipating the largest annual dip at 6-7% by 2023. On the other hand, ANZ experts predict a drop of 4%. It’s worth bearing in mind that these numbers are a far cry from the rampant growth we’ve seen – and a 4% drop would only return prices to the levels seen in September 2021.

While we may not see property prices return to pre-pandemic rates, Rupert Gough, CEO at Mortgage Lab, expects 2022 to present more bargains for prospective buyers – something partly prompted by the removal of interest deductibility. He anticipates these will most likely emerge from July, after investors’ tax returns reveal the full financial impact of the property law.

And Tony Alexander, one of New Zealand’s leading independent economists, suggests that a mass emigration of Kiwis over 2022 will “feed into some extra calming of the housing market this year.” This could be driven by new opportunities in Australia, or a behavioural trend instilled by the pandemic, which is seeing Kiwis lock down their first homes (excuse the pun) before embarking on OEs once the borders open up.

Overall, the experts seem to agree: 2022 could finally mark the end of New Zealand’s soaring house prices. It is, however, worth bearing in mind that we’re still in an era where one unexpected variant can change everything.