All sources have been thoroughly verified for credibility. Furthermore, an industry specialist has reviewed and approved the final article.
Everything you need to know is included in our New Zealand Property Pack
Are you considering buying real estate in the land of Kiwis? Are you questioning whether now is the best time to proceed?
Market timing is a subject where everyone has their own take. Your New Zealand acquaintance might suggest that now is a perfect time to invest in property, whereas your spouse, who is originally from Auckland, might have a different view and recommend waiting for more stability.
At BambooRoutes, when we create articles or update our pack of documents related to the real estate market in New Zealand, we believe in solid evidence and concrete data, not mere opinions or rumors.
After thoroughly analyzing official reports and statistics available on government websites, we have gathered solid information in a database. Here are our findings that can assist you in determining whether it's the right time to invest in real estate in New Zealand.
Ready? Let's go!
How is the property market in New Zealand these days?
New Zealand is, today, an exceptionally stable country
Positive
Stability is crucial for property buyers in a country, as it offers security, protects investments, and creates a nurturing atmosphere for progress and contentment. It is an information you need as a foreigner looking to buy a property in New Zealand.
You probably already know that New Zealand is an extremely stable country. The last Fragile State Index reported for this country is 15.9, which one of the highest scores in the world.
New Zealand's exceptional stability today can be attributed to its robust democratic institutions and transparent governance, which foster public trust and effective policy implementation. Additionally, its geographic isolation and strong border controls have historically minimized external threats, allowing the country to focus on internal development and social cohesion.
All good for the stability. Now, let's redirect our attention to the economic forecast.
New Zealand will keep growing steadily
Positive
Before investing in Real Estate, look into the economic health of the country.
As per the IMF's forecasts, New Zealand will end 2024 with a growth rate of 1.1%, which is not bad. For 2025, the figure we're looking at is 2%.
This steady growth might keep going since New Zealand's economy is expected to increase by 9.1% during the next 5 years, resulting in an average GDP growth rate of 1.8%.
A moderate growth rate in New Zealand's property market suggests stability, reducing the risk of sudden price drops and making it a safer investment. Additionally, steady growth can lead to consistent returns over time, making it an attractive option for long-term investors.
However, GDP growth is not the only metric to look at.
New Zealand business owners are way more confident in the economy
GDP growth is great, but it may not fully encompass all the expectations of businesses in property market. Luckily, in New Zealand there is an official metric that is frequently updated. It's not the case for every country, so we're lucky.
The Business Consumer Index (BCI) is the name given to this metric, which relies on surveys and assessments of business leaders to gauge their confidence in the present and future economic conditions.
The ANZ Bank New Zealand's data indicates that the Business Confidence Index is currently 61 for New Zealand. This score is excellent.
2.
The impressive level of the Business Confidence Index in New Zealand can lead to a vibrant property market. With increased confidence in the economy, businesses are more likely to invest, potentially driving property price growth. Buyers may find more options and heightened demand, creating an exciting environment for property purchases.
New Zealand is providing less building permits
Neutral
When you think about buying property in a country, it's worth paying attention to how many permits have been given for building houses and other properties. More building permits being delivered signifies trust in the property market, signaling a promising situation.
Unfortunately, the number of building permits granted is falling in New Zealand.
In the past year, according to Statistics New Zealand, the number of building permits delivered by the New Zealand municipalities fell by 1.1%, from 50,514 to 49,965 units.
Clearly, this is a negative sign. Let's explore further data.
One last point to consider - a decline in building permits directly affects the availability of properties. In such a situation, it is probable that housing prices will see an increase in New Zealand in 2025.
Property prices in New Zealand fall after Initial upsurge
Neutral
New Zealand's home prices have increased by 32.8% in 5 years according to Quotable Value.
It means that if you had bought a beach house in Queenstown for $1,000,000 five years ago, then it would now be worth around $1,328,000.
Recently, after a period of significant growth, property prices have experienced a subsequent decline in NZ.
A decline in property prices should not always be viewed as a negative signal. It could potentially indicate a market correction, presenting an opportunity for you to invest in a property in New Zealand at a discounted price.
You can find a more detailed analysis of the real estate prices in our property pack for New Zealand.
Everything you need to know is included in our New Zealand Property Pack
New Zealand's population is growing and getting (a bit) richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In New Zealand, the average GDP per capita has changed by 4.6% over the last 5 years. Though not substantial, there is still a positive trend of growth. Furthermore, the New Zealand population is growing (+6% in 5 years).
This means that, if you purchase a scenic cottage in Queenstown and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be a rise in rental demand in New Zealand cities such as Auckland, Wellington, or CChristchurch in 2025.
Properties promise modest rental yields in New Zealand
Neutral
Rental yield is a widely recognized metric in real estate investments.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in New Zealand is purchased for 600,000 NZD and generates 36,000 NZD in annual rental income, the rental yield would be 6%.
The website Numbeo indicates that rental properties in New Zealand promise gross rental yields from 2.3% and 5.0%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in New Zealand.
It suggests a satisfactory level of income relative to the property's value.
As previously observed, the supply of real estate will remain constant, indicating that property prices are unlikely to change. However, there might be a slight growth in the number of affluent tenants. Consequently, rental yields might increase in New Zealand in 2025.
Everything you need to know is included in our New Zealand Property Pack
In New Zealand, inflation is anticipated to be minimal
Neutral
Simply put, inflation is the continuous climb in prices.
It's when your go-to Kiwi burger costs 15 New Zealand dollars instead of 12 New Zealand dollars a couple of years ago.
If you're about to invest in a property, high inflation can benefit you:
- property values tend to increase over time, leading to potential capital appreciation
- inflation can result in higher rental rates, increasing cash flow from the property
- inflation reduces the real value of debt, making mortgage payments more affordable
- real estate can act as a hedge against inflation, preserving the value of the investment
- diversifying into real estate provides stability during inflationary periods
- tax advantages, like depreciation deductions, can help offset the impact of inflation
According to the IMF's estimations, over the next 5 years, New Zealand will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data infers that New Zealand is expected to have near-zero inflation then. Prices won't rise and then your property investment may not appreciate.
Is it a good time to buy real estate in New Zealand then?
Time to conclude !
New Zealand is known for its exceptional stability, making it an attractive place to consider buying property. The country's economy is expected to grow by 9.1% over the next five years, which translates to an average GDP growth rate of 1.8%. This steady economic growth suggests that New Zealand will continue to be a reliable and secure environment for property investment. With such a stable backdrop, 2025 could be an ideal time to invest in real estate, as the country's economic health supports a thriving property market.
The property market in New Zealand is experiencing moderate growth, which is a good sign for potential investors. This moderate pace reduces the risk of sudden price drops, making property investments safer and more predictable. For long-term investors, this stability can lead to consistent returns over time. By 2025, the property market is likely to continue this trend, offering a balanced environment for those looking to invest in real estate without the fear of volatile market swings.
Another factor to consider is the limited number of building permits being issued in New Zealand. This restriction on new construction can lead to a decrease in the supply of available properties, which might help maintain or even increase property values over time. Coupled with a growing population that is becoming slightly wealthier, the demand for housing is likely to remain strong. This dynamic can create a favorable market for property owners, as the balance between supply and demand supports property value appreciation.
Additionally, rental properties in New Zealand offer promising gross rental yields, ranging from 2.3% to 5.0%, according to Numbeo. This potential for rental income, combined with the anticipated minimal inflation, makes property investment even more appealing. With inflation under control, the purchasing power of rental income is preserved, enhancing the attractiveness of property investments. By 2025, these factors could align to create a lucrative opportunity for those looking to buy property in New Zealand.
We genuinely hope this article was useful!. If you need to know more, you can check our our pack of documents related to the real estate market in New Zealand.
-Will real estate prices go up in New Zealand?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.