6 Real Estate Trends to Watch in New Zealand in 2023

The New Zealand real estate market has experienced significant changes over the last few years. Prices on the Kapiti Coast radically climbed at a rate of 1.88% a month in the 15 months before the peak in October 2021 and since then has been more gently declining again at rate of 1.44% per month. Visit https://www.villagerealestate.co.nz/2023/03/kapiti-market-update-march-2023/ for more details about Kapiti market prices.

It’s not just prices that are changing before our eyes, however. As we move into the 2^nd quarter of 2023, there are several real estate trends emerging. Let’s explore some of the trends to watch in the New Zealand real estate market in 2023.

A Slowing of the Decline in Housing Prices

The first trend that we’re likely to witness in the New Zealand and Kapiti real estate market in 2023 is the slowing of the decline in housing prices. The buyers’ market doesn’t look like it’s budging this year although, we predict the decline may be at a slower rate, perhaps than in the last 15 months as buyer activity picks up in response to opportunity. The upcoming national election will have some people sitting on their hands, waiting to see if there will be a change of government, and indeed what that may do to the property market. Most people, however, just get on with their buying and selling decisions because when folks buy and sell in the same market, it’s the NET OUTCOME that matters more than the hard numbers. The decline in housing prices can be attributed to several factors, including rising interest rates, government policies to cool the housing market, the impact of the COVID-19 pandemic and cost of living increases. If selling this year is on the cards, then contacting your agent sooner than later will minimise losses, although we’ll also add that having the home as well presented as you can, is likely to offset this risk.

Increased Demand for Affordable Housing

Another trend that we’re likely to see in 2023 is the increased demand for affordable housing. With the decline in housing prices, more people will be able to afford to buy homes. However, relative other countries, price to income ratios are still quite lofty relative to other countries.  As a result, we can expect to see increased demand for affordable housing in 2023. This has already started to lead to an increase in the construction of affordable housing units by developers, and HUGE impactful government regulatory changes and intervention (Resource Management Amendment Act 2020, Residential Tenancies Amendment Act 2020 and the establishment of Kāinga Ora) to provide more affordable housing options for the population. Units are already starting to pop-up all-around town to meet this demand.

Increase in First-time Homebuyers

With the decline in housing prices and increased demand for affordable housing, we can expect to see an increase in first-time homebuyers in 2023. This is sweet music to our real estate ears. First-time homebuyers are a significant contributor to the market despite facing several challenges, including unpredictable interest rates, inflation and high deposit requirements and strict lending criteria while lenders are still a bit antsy about risk.

Growth in Regional Real Estate Markets

As housing prices in major cities continue to be under the most pressure, we can expect to see growth in the regional real estate markets. Our market has always been well represented by Porirua, Wellington and Hutt Valle buyers, but as more people move out of Wellington City we need to make sure our marketing lands in their laps more than ever. Again, this is great news for Kapiti, and a phenomenon that will help insulate us from the extreme market trends. The COVID-19 pandemic and remote work policies have also contributed to this trend. In 2023, we can expect to see more people moving to regional areas in search of more affordable housing and a better quality of life.

Environmental Consciousness

Environmental consciousness is rapidly growing in New Zealand, and businesses are taking notice of consumers’ decisions to make a positive impact on the planet. Real estate agents are no exception, with traditional plastic signage being a particular area of concern. Often single-use and used in pairs, considering the approximately 90,000 real estate transactions that occurred in 2022 in New Zealand, signage presents a significant opportunity for real estate companies to lead the way in environmental sustainability.  By opting for more eco-friendly alternatives, real estate companies can not only reduce their environmental impact but also set an example for others to follow. Given the high visibility of real estate signage, it is essential that the industry takes the lead in this area. Village Real Estate is proud we have been using only timber recyclable signs since 2020.

Rise of Technology in Real Estate

The final trend to watch in the New Zealand real estate market in 2023 is the rise of technology in real estate. The COVID-19 pandemic has accelerated the adoption of technology in the real estate industry, with more people opting for virtual property tours and videos. In 2023, we can expect to see more innovation in the real estate industry, perhaps even the use of artificial intelligence, which we at Village have already started embracing where appropriate and in small doses, smart contracts, and perhaps the beginnings of virtual reality. These technologies may improve efficiencies, but we wholly believe that being such an emotional and specialist profession, you just can’t get past people to people support, advice and negotiations.

These trends are likely to have a significant impact on seller and buyer experience when diving into a real estate project this year. The best industry professionals, including real estate agents, mortgage broker and lenders, builders and developers, and lawyers, will be a step ahead of these changes. Buyers and seller will be well served when they engage specialists who are looking forward several years as much as they are looking back to the “good times”.