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Update on the housing market 

An article from the November 2024 Financial Stability Report

Charles Lilly

New Zealand house prices have seen rapid growth and decline in recent years. After a run-up in prices and sales over the first two years of the pandemic, the market experienced broad-based price declines followed by a period of stabilisation. The drivers of this volatility were large changes in monetary policy (interest rates), government policy changes, population growth trends and new housing supply.

Houses and land account for most of New Zealand households’ wealth, and home loans make up over 60 percent of bank lending. The sustainability of house prices and the risk of correction therefore matter for financial stability. When house prices are well above sustainable levels, this raises the risk of a sharp correction leading to significant losses on banks’ mortgage lending. A stable financial system is critical for long-term economic growth and the well-being of New Zealanders.

This special topic:

  • provides an update on current conditions and the near-term outlook for the housing market
  • compares New Zealand’s recent house price cycle with house price cycles seen in other countries
  • discusses how changes to housing supply and macroprudential policies are expected to affect house price cycles in the future.

Figure 2.5: House prices and sales

Note: Monthly turnover compares the monthly number of house sales to the total estimated dwelling stock in New Zealand.
Figure 2.5 House proces and sales
Source: REINZ, Stats NZ, RBNZ estimates.
This chart shows house sales and prices for New Zealand. House prices peaked in late 2021 and fell by around 14 percent over the following 18 months, and have since been stable. House sales have been lower over the past two years than historic average rates of sales.