In one neighborhood, the first step was the mailbox: a thick layer of “For Sale” ads cluttered the mail. “Almost every day there is spam posting houses for sale,” said Greg, who lives in New Plymouth in the central North Island. Then he noticed things changing on the street. “Every house on our road that has sold since we moved in three years ago has sold within a week,” he said. “But now the house down the street has been on the market for about a month with no signs of moving.”
The same trickle of symptoms is becoming visible in many New Zealand towns: Sale signs remain lit as lawns grow around them, auctions pass without bids, listing pages pile up on real estate websites . For years, the country’s housing market has been on a seemingly unstoppable upward trajectory, with homes in major centers averaging more than $1 million. Today, New Zealand is in the midst of some of the biggest declines and downturns since the aftermath of the global financial crisis. Some banks forecast a 10% drop during 2022.
The Guardian asked readers to share how they were experiencing market declines and found a mixture of worry, relief and hope.
As economists warn of “monstrous” inflation that could drive up mortgage payments, some locked-out New Zealand buyers are hoping they can pick up the pieces.
“I’m partly excited about this, any change from the skyrocketing real estate market of the last two years is potential ‘in’ for me as a first-time buyer,” said Megan, 35, design director in Wellington. “However, I’m also terrified of the impending recession and what it means if I were to face a mortgage for the first time as well as new costs like insurance and rates.”
For some, it’s the first glimpse of a chance to own a property. “My partner and I think the drop in prices means we might be able to buy a house this year,” said Shayna,* an IT specialist in Wellington. “We will wait a few more months to see if it drops a little more. We are fortunate to be in the privileged position of having an above average income, dual income and potential help from parents – I think we would really struggle without these factors, but we will see what happens .
“Honestly, it’s a relief,” said Will, a civil servant in his late twenties, “I’m worried about some friends who really tried to buy a house and will now have to deal with payments massively increased.”
A pressing social problem
These concerns are widespread: a perfect storm of rising interest rates, tougher lending laws, inflation, the high cost of living and falling prices. A New Zealand consumer survey released last week found that just 16% of New Zealanders thought it was a “good time to buy” in February 2022, compared to 25% in October 2021. Conversely, 58% thought it was a bad time to buy, up 8 percentage points. There was growing concern among New Zealanders that a house would retain its value – an increasing proportion believed house values would fall over the next year, and fewer believed they would rise. Overall, 83% thought the housing market was still “overinflated” or “out of control”.
This means that many new buyers are worried about going beyond their means – and some who bought when the market was at its peak could find themselves in trouble.
“I’m torn between trying to buy a good house at a good price and locking in a reasonable interest rate for a few years to try and get by, or just sitting around for the next 6-9 months to see what direction it’s fine,” Megan said. “Wasting $27,500 a year on rent is incredibly painful, but at least I’m only dealing with the rising cost of living right now — if I get a mortgage, I gotta add the pain of high interest rates on top of that.
New Zealand’s runaway housing market has long been considered one of the country’s most pressing social problems, creating and entrenching both class and generational wealth inequalities. So for some who already own homes, the change is bittersweet: the happiness that their peers or the next generation might be able to climb the ladder, combined with the anxiety of seeing their own homes shrink. value. “I’m relieved it’s slowing down,” said Tracy, 36, of Hawkes Bay, “Our property must be worth over a million now, but I’d love to see values halve or even fall to a quarter of their peak.”
His sentiment was echoed by Jess, 44, education consultant from Waikanae. “My partner and I own our house in a small town and its value has gone from $340,000 to $1.03 million in eight years. It’s ridiculous. We have no idea how the average person can get their first home or how impossible it must be for low-income people. We will be happy to see our value go down – it means a fairer New Zealand may be possible.
“I’m glad it happened,” said David, 52, a business owner in Auckland who was in the process of selling his own home. “We were a long way from the deal and hopefully that helps young homebuyers. [I’m] sad for those who bought last year and hopefully few people will be seriously affected.
*Shayna’s name has been changed to anonymize them.