Waikato Housing Market Update with Jarrod Kerr, Chief Economist at Kiwibank

Waikato house prices are expected to stabilise over the next year or two, and home loan rates will start falling by the end of 2023, according to Kiwibank economist Jarrod Kerr.

Speaking at a recent event hosted by Waikato Real Estate, Kerr explained that global inflation had peaked and was declining, which would help bring New Zealand’s inflation under control. He noted that around half of the inflation experienced in New Zealand was coming from offshore, so it was essential to examine what was happening globally.

He added that domestic inflation was mainly driven by the cost of building houses, which had gone up by 20-30% in recent years.

The Waikato housing market is of course of great interest to Waikato Real Estate, a local and family-owned Property Management company led by Michelle Pearson.

“We are managing a portfolio of over 1,200 properties in the greater Hamilton area, so working alongside our property owners to understand market conditions is key to their success and ours,” said Michelle.

During the discussion, Kerr also highlighted that there was a good chance New Zealand had already entered a technical recession. He pointed out that the fourth quarter of 2022 had seen a contraction of 0.6%, which could lead to two quarterly contractions, which technically means a recession.

He warned that the worst of the recession could still be yet to come, as the Reserve Bank of New Zealand and Treasury were forecasting a recession to begin in the middle of 2023.

Kerr also spoke about the outlook for builders and developers, who were facing high borrowing and material costs and high wages. He noted that the industry was likely to experience a massive ramp-up in construction followed by a significant slowdown, as has been the trend in New Zealand in the past. However, he added that the rebuild of the Hawkes Bay, which was expected to begin soon, could slow down the process.

Increased regulation around owning rental properties was discussed. Kerr noted that the RBNZ’s introduction of Debt-to-Income rules, slated for April 2024, are a possible disruptor and something property investors should keep an eye on.

When asked by the audience what he would do if his mortgage was coming off a fixed rate. Jarrod pointed out that he cannot provide financial advice but can share what he does himself. Recently, he had a loan to re-fix and he opted to split up the loan and fixed for a short period only, feeling that interest rates will fall towards the end of the year.

Oliver Pearson

Manager and Property Investor for 20+ years

Oliver Pearson

Manager and Property Investor for 20+ years

Oliver Pearson began investing in property aged 21 and has since bought, developed and sold real estate in the UK, USA, South East Asia and New Zealand. After a career in banking he is now on the management team at Waikato Real Estate and has contributed to property articles for NZ Herald, Stuff and Property Investor Magazine.

Based in Raglan, Oliver's passions extend beyond property to surfing, hydrofoiling, and providing a taxi service for his children.