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New Zealand’s false housing market faces a reset as borders open

New Zealand is experiencing an artificially suppressed housing market.  As borders reopen, house prices, alongside demand, could reignite as those locked out through MIQ restrictions return looking for somewhere to live, says a Hamilton real estate agent.

Lodge Real Estate Managing Director, Jeremy O’Rourke, says New Zealand has been operating in a false market with our borders closed and people hunkered down in a semi-lockdown state as Omicron numbers continue to rise.  He believes this is set to change.

“As our borders reopen and tensions increase between Russia and the Ukraine, New Zealanders will be looking to return to safety.  Citizens and residents will travel back to New Zealand to reconnect with family, and they will all need somewhere to live. 

“We know the Covid-19 crisis is pushing many home.  Adding to this, we saw Kiwis return en masse after major global crises like 9/11 and the global financial crisis, so we believe the Ukrainian conflict may trigger an Antipodean population shift once again,” says Jeremy.

Some economists have predicted a long-term slump in the market on the back of rising interest rates, high inflation, and changes to bank lending rules. QV’s February report found home values dipped in Hamilton for the second month in a row, down 0.4 per cent in February.

But O’Rourke says some dire predictions made by economists are haphazard and misguided, because the market is artificially suppressed. 

Around 5000 international students were tipped to return to New Zealand once borders reopened, and around ten percent of those will head to Hamilton.  There are only 80 rentals currently available in the city and with 50 percent of those being small studios the impending student influx posed a real challenge, he says.

“We expect the second half of the year will see a renewed vigor from investors as simple supply and demand pressures caused rents to rise, making rental property investments very attractive,” says O’Rourke.

Throughout February there had still been multiple offers made on many quality Hamilton homes, although foot traffic at open homes had been down because of increasing Omicron cases.