Housing market forecast for 2024

Predictions on what could lie ahead for the 2024 housing market in Aotearoa from our Kiwibank Chief Economist Jarrod Kerr and Senior Economist Mary Jo Vergara. This is essential reading for home buyers and homeowners.

Our forecast is for 1% off fixed mortgage rates by year-end.
Jarrod Kerr, Kiwibank Chief Economist

A forecast for the year ahead

21 January 2024

After a tough few years, Chief Economist Jarrod Kerr predicts that the outlook for the housing market this year is more positive. Kerr forecasts that the Reserve Bank will cut interest rates by 100 basis points which could mean 1% off fixed mortgage rates by year-end and that house prices could stabilise with a moderate 5-7% increase.

The forecasted house price increase will be partly due to record-high migration in 2023, which continues to increase housing demand as our new arrivals buy homes and get settled. This increase will mostly be in the main centres, but Senior Economist Mary Jo Vergara suggests that the continuing trend of remote working could mean sale price growth in regional areas.

"Generally speaking, when the housing market is doing well, that provides confidence for many businesses and households," says Jarrod. "In short: it’s a good news story ahead for home buyers."

What it could mean for you

Jarrod and Mary Jo offer their Insights on what their housing market forecast could mean for Kiwi at different stages of their house-buying journeys.

If you're saving up your deposit

  • Time it right for you

No matter what the market is doing, it’s less about the right time in the market and more about the right time for you. "The right time to enter the market is when you’ve got your deposit," says Jarrod. "In the meantime, keep your head down, keep saving and stay focused on your goal."

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If you're buying your first home this year

  • Do your research

Confessed finance nerds Mary Jo and Jarrod love a good research session, and they strongly recommend that you do your research, too. Investing time and effort into understanding your options will pay off in the long run. “Buying a house is the largest purchase most people will make, so it's important to get out there and look at different areas to see what you can afford," Mary Jo says.

  • Budget using current rates

Despite the forecasted potential rate decrease, Mary Jo suggests that Kiwi play it cautiously and base their repayment budget on current rates. “Keep any rate cuts in the back of your mind, but don't base your budget around them,' she says. "That way, any future cuts can be a pleasant bonus later in the year."

If you already have a home loan

  • Split it up

Splitting up your mortgage into different, staggered fixed-term durations can offer you flexibility. "Consider a mix of fixed-term durations including 6 months, 1 year, 2 years and 5 years," he says. See our different fixed-term options.

Jarrod explains that the idea is to always have a portion of the mortgage rolling off so that your fixed terms don't all expire at the same time. This approach helps to avoid the risk of having to refix all your loans on whatever market rates are at the time, and it could allow you to take advantage of lower rates that could be in the market.

  • Pay it off faster

If you can build up some savings, then another benefit of splitting your mortgage into different fixed-term durations is the opportunity to pay off your mortgage more quickly. Once a fixed term comes to an end, you have the option to pay down more on that portion of your mortgage using your savings lump sum.

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