The previous economic issues of continued high inflation and the associated relatively high interest rates have lessened in recent times, however economic uncertainty has continued to impact the property market, with Gross Domestic Product (GDP) having an annual growth of 0.1% to September 2024, with the most recent quarterly growth of -1.0%. Inflation is currently within the monetary policy committee 1%-3% target band at 2.2% and is expected to stabilise within the target mid-point. We note that the latest Reserve Bank setting for the Official Cash Rate has dropped 0.5%, bringing it down to 4.25% with potential for further falls in early 2025. This does have the potential to add impetus to the current quiet residential market.

The past six months have seen a comparatively high volume of properties on the market without a corresponding volume in prospective purchasers.

At the date of valuation, most sectors of the property market could be described as being in favour of purchasers, reflecting the reasonably high volume of properties for sale and only limited interest from the buyers. Value levels are perhaps sliding sideways and, in some instances, have the potential to decline.

Current drivers of the housing market:

• Comparatively high interest rates with the expectation that they may fall again in the short term.
• Easing/changes to Reserve Bank lending restrictions.
• Buyer reluctance to commit to purchases.
• An increase of stock / listings.
• Increasing construction costs however stabilising of late.
• Net migration levels have significantly reduced from the all time high of 12 months ago.
• Owners moving to lower value situations to downsize their mortgages.
• Continued low business and consumer confidence.
• Considerable reduction in building consents.
• Poor economic growth.

Property values appear to have stabilised after a period of falling values, however it is not anticipated that they will noticeably rise in the medium term.

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