Impact of Job Losses on 2024 House Prices: A Risk Analysis

Explore the potential impact of job losses on house prices in 2024. Learn why this risk could shape the housing market.

Job losses are becoming a significant concern in the housing market as we move further into 2024. Recent data from Stats NZ has shown a rise in the unemployment rate from 4% in Q4 of last year to 4.3% in Q1 of this year, with actual job losses being a contributing factor. This trend is expected to continue, with pending cuts in the public sector adding to the risk of further job losses impacting the housing market.

The latest CoreLogic House Price Index has also reflected the impact of these factors, showing a minor drop in average property values in April. This decline can be attributed to high mortgage rates and an increase in listings, giving buyers more negotiating power. Despite this slight decrease, property values are still significantly lower than their peak, indicating that housing affordability remains a challenge for many.

On the bright side, new dwelling consents have remained relatively stable compared to the post-GFC period, with over 35,000 consents issued in the past 12 months. While this is a positive sign for the housing market, the sector is still facing challenges, with future workloads expected to be softer.

Looking ahead, it will be crucial to monitor the loan terms chosen by borrowers in March, as well as the activity of first-home buyers in the market. With mortgage rates expected to remain high in the near future, many buyers are opting for short-term fixed loans to take advantage of potential rate decreases.

Job losses pose a significant risk to the housing market in 2024, with high mortgage rates and housing affordability remaining key concerns. While new dwelling consents offer some hope for the sector, ongoing challenges are likely to impact property values and sales in the coming months.