Housing market - what’s in store for 2022?

Aremarkable year for New Zealand’s residential property market has come to an unremarkable end, with a flood of new listings helping to dampen home value growth but also failing to stop it altogether.

The average home increased in value by 7.8% nationally over the three-month period to the end of December, up from the 6.9% quarterly growth in November. The national average value now sits at $1,053,315.

QV spokesperson Simon Petersen comments, “No matter how you slice the data, 2021 has been an absolutely bumper year for New Zealand’s residential property market. We all thought 2020 was a big year, and yet values increased by less than half as much on average as they have this year.”

QV Operations Manager Paul McCorry commented, “Never in recent times have we had so much external intervention in a housing market and yet, in the midst of a global pandemic, the market grew by a record 28.4% nationally.

“2021 has certainly been actionpacked. We’ve seen the return of loan to value ratios, rapidly rising debt-to-income ratios, high inflation, low-but-rising interest rates, and a raft of significant tax changes designed to take some of the steam out of the market. Just about the only thing we haven’t seen this year is significant drops in home values.”

Mr Petersen says he doesn’t expect to see significant drops in 2022 either. “However interest rates are highly likely to rise further, making things even more difficult for first-home buyers in the foreseeable future.”

Mr McCorry says, “It became pretty clear towards the end of the year that this level of growth was not going to continue indefinitely as we started to see a decline in the quarterly rate of growth. The market has definitely pumped the brakes, but it hasn’t ground to a halt completely.”

“The most likely lever to reduce the rate of inflation going forward is to increase the Official Cash Rate (OCR), which in turn increases interest rates banks will offer to prospective homeowners. We saw successive increases in the OCR in October and November, and it is no surprise that this was when we started to see the tide turn a little in the rate of growth,” says Mr McCorry.

With increased listings due to the nicer weather, buyers have more choice. Managing vendor expectations coming out of 2021 and into 2022 will be a very advantageous skill set for an agent,” added.