New Zealand’s property prices have gone stratospheric. The latest reporting from the REINZ has Auckland’s median price up a whopping 28% over the last 12 months to July 31, Canterbury up by 22.2% and Wellington up by 23.6%. 

These may be the sharpest house price increases New Zealand has ever seen – which begs the question – how long can this go on for? Is a house price correction around the corner?

The future for NZ’s house prices

The housing market is a complicated beast that is difficult to predict at the best of times. Even the sharpest economic minds struggle.

Case in point: at the start of the 2020 lockdown, many leading economists forecasted price drops to the tune of 10-30%. 18 months on, and we’ve had the exact opposite.

In July/August 2021 economists are at it again with more forecasts for the future:

• Westpac is predicting a drop in house prices peaking at around 5% from 2023 to 2025 with house prices expected to continue increasing after that. 
• Jarden expects a small drop of around 6% in 2023.

The NZ Treasury held a different view in their May budget announcement, however. They forecasted that prices would continue to increase, albeit at a slowing rate – just 0.9% by June 2022. They then expect house price growth to pick up again, reaching 2.5% in the June 2025 quarter.

What to make of it all?

House price predictions missed the mark by miles when COVID struck – so what are we to make of this latest round of predictions?

The future is more certain than it was in March 2020, so it’s unlikely that economists will be as far off as they were when COVID first struck. It also seems that the general trend among predictions is that there will be no house price crash – just a gradual slow down.

In the long run, this is a good thing for the New Zealand housing market. Improved affordability and more sustainable house price increases will help ensure that housing is a solid, future-proofed investment for years to come.

Buying when the time is right

While it’s a great idea to keep a close eye on the market, it’s most important to buy when the time is right for you.

So if you’re ready to buy, put forecasts to the side and spend your time thinking about your own circumstances instead:

• Are you ready to move?
• Are you able to service a mortgage? 
• Do you have your finances sorted?

If it’s the right time for you to purchase and you limit your search to well-located, high-quality properties, you’ll almost always come out ahead – regardless of what the market is doing.

Take a look at Williams Corporation’s available developments in Auckland, Wellington and Christchurch to get started.

Find out more about Williams Corporation developments here.