This report is part of PERSPECTIVES, a comprehensive look into the world of prime residential real estate. Access the full report here to discover the latest trends and dynamics shaping the market.
Boasting snow-capped Alps, unspoiled beaches and a laid-back welcoming spirit, New Zealand is on a comeback tour.
After a tumultuous year characterized by a slump in sales, the luxury real estate market in the remote island nation is showing signs of revival.
Case in point: Manuka Point Station. Anthony Morsinkhof, managing director at PQ Property Intelligence, listed the secluded luxury lodge in January 2023 with an asking price of NZD 38 million (US $25 million). Months came and went with little to no activity, yet at the tail end of the year, five interested buyers materialized.
That’s one of a few examples he cites. He’s also working on an off-market deal for a NZD 50-million home (US $31 million), poised to set a record for the most expensive residential property when sold.
“I’m already seeing differences with offers coming in and properties going under contract right now, even in the holiday period,” Morsinkhof says. “People seem to be in buying mode again.”
The flurry of new real estate activity is a welcome change after a relatively lean 2023.
Sales volume dipped in April to its lowest level in 40 years, and property values nationwide fell 5% from last year. In Auckland, home to the priciest postal codes in the country, luxury home sales in the last quarter were down NZD 1.5 billion year over year.
The reasons for the dip are threefold: strict government policies, soaring interest rates and short supply.
Kourarau Homestead, 460 Te Wharau Road, Masterton, Wellington. Presented by PQ Property Intelligence
The foreign buyer ban was put in place in 2018 by the Labour government. The polarizing law, which is still in effect, prohibits non-resident foreigners from purchasing existing homes in New Zealand, with the exception of Australian and Singapore nationals.
The conservative National Party, elected in October, made waves when it campaigned to reverse the foreign buyer ban, which could open the door to increased foreign investment. Although there are no formal policy changes so far, talk of the reversal did mobilize the market and elicit renewed optimism.
There is a loophole though, Morsinkhof says. Foreign investors can purchase residential properties if they have commercial use, such as a winery or a sprawling estate with hotel-luxury lodge capability that isn’t zoned as residential.
That has proved to be an attractive work-around for investors from Switzerland, Singapore, United Arab Emirates and the United States, Morsinkhof says. He expects this overseas interest to grow in 2024 amid a more business-friendly government.
Rising interest rates were another factor contributing to the decline in sales. In 2023 alone, interest rates rose from less than 3% to upward of 8%. Although rate hikes largely impact buyers at the lower end of the market, they did have an effect on the luxury market this year, Morsinkhof says.
A shortage of premium high-end properties also complicated matters. Still, there were plenty of notable sales in the country’s most coveted destinations.
4195 Masterton-Castlepoint Road, Masterton, Wellington. Presented by PQ Property Intelligence
In Queenstown, an affluent haven known for its luxury resorts and snow-capped mountains, a mansion is reported to have sold in June for more than NZD 40 million, nearly US $25 million. At that price, it would top the country’s decade-old sales record of NZD 38 million.
There was also a NZD 19.2-million property (US $11.9 million) and a NZD 16-million residence (US $9.9 million) that sold nearby, according to data from OneRoof.
On North Island, Auckland maintained its foothold with three sales above NZD 20 million, or US $12.5 million, and five sales in the NZD 10-million to 20-million range.
Looking ahead, the market is ready for improvement.
A recent report from Knight Frank reveals Auckland stands to see a 10% increase in luxury home prices in 2024, surpassing major cities such as Dubai, Sydney and Miami.
“I’m positive for the new year,” Morsinkhof says. “There’s still hard work and people need to be realistic about prices they’re going to get, but there’s definitely a change happening.”
