The year of conflicting forces

Reflecting on the year so far, Kelvin notes that the "conflicting forces" have largely cancelled each other out. He initially pointed out that while "lower mortgage rates would tend to support sales volumes and property values," this would be countered by "the high level of stock/listings on the market, the weak economic and labour market backdrop, and also the DTI rules."

The result? "Conditions do indeed remain fairly muted," says Kelvin. He explains that "property values have stayed broadly flat at the national level, with markets such as Auckland and Wellington still subdued, and even slightly more resilient areas such as Christchurch or Hamilton not exactly racing away either."

So, what are the positive forces helping to keep the market afloat? Kelvin points to a few key factors.

Firstly, the oversupply of listings is beginning to ease. "We’ve just started to see the stock of listings drift lower, as sales volumes get back towards normal," he observes.

Secondly, key buyer groups are still making their presence felt. According to Kelvin, "certain buyer groups – such as first home buyers and ‘Mum and Dad’ mortgaged investors – remain fairly active."

Finally, there’s a delayed benefit from lower interest rates still to come. While rates may not drop much further, Kelvin highlights that "there’s a lagged impact still to come through as more existing borrowers roll off older, higher rates and reprice their loans down to market levels." This will continue to ease financial pressure on many households over the coming months.

Despite these positives, significant challenges remain. The primary hurdle is the broader economic environment.

As Kelvin cautions, "the economy is battling to get into its stride and the unemployment rate may yet go a bit higher before it gradually starts to decline again." This economic uncertainty naturally makes potential buyers more hesitant and can limit their borrowing power.