Good news for buyers and bad news for investors: house prices are expected to plummet this year almost back to levels last seen prior the huge rise in the housing market in 2020.
Investment and advisory firm Jarden's latest review into New Zealand's housing market's impact on Fletcher Building has found average house prices are expected to drop to $720,000 by December 2023, an 18 percent decrease from the current average of $905,000 in April.
The modelling also suggests that housing demand could slow dramatically by the end of 2022.
Jarden research analyst Grant Swanepoel said average house prices peaked at $965,000 in November 2021, which is a 49 percent increase from 2019 when the average house price was just $647,000.
He said prices have since retraced by six percent in April 2022.
"All signs are that they are continuing to fall," Swanepoel said.
Swanepoel said the two-year mortgage rate, which is the main doctor in people's ability to buy a new house and hold onto existing properties, is predicted to go back to where it was in 2019, when $647,000 was the average mortgage, based on RBNZ Official Cash Rate target changes.
However, there are still barriers for people entering the housing market, with building materials expected to keep soaring in the short term.
Jarden found building material margins may continue to hit new highs through the Recipient's Fiscal Year 2023 (FY23) falling back to normal margins in FY24.
However, the analysis found building material margins could fall sharply in FY25 as building activity falls below capacity.