Things to watch in 2024

As 2023 draws to a close, reflecting on the weather events, inflation and enduring an election, it’s fair to say 2023 was not a great year for New Zealand. But will 2024 be any better? Here are a few things to watch for in 2024

Inflation:

In most countries around the world inflation appears to have peaked, or at least getting close to the top of the cycle. Expect inflation to slowly decrease during 2024.

Immigration:

Like the last 12 months, immigration over the next 12 months will be strong. However, unlike previous period of high immigration I do not think immigration alone will provide a boom for the housing market. It looks like this round of immigrates are here to work and will not be in a position for a number of years to purchase property.

Rents:

Rents will increase strongly during 2024 driven by immigration and a shortage of property to rent. This will be the big story in 2024 as the increasing rents will cause a lot of financial hardship.

Unemployment:

On the back of a slower economy and strong immigration unemployment is picked to increase from around 3.20% to 5.50% which is close to the average unemployment rate over the last 40 years. This will ease labour shortages and pressure to increase wages.

House Prices:

The housing market appears to have bottomed out and is now turning the corner.

Expect modest house price increases in 2024 and supply will start to become an issue.

Interest Rates:

Interest rates will start to fall, but not until the second half of next year at the earliest and not by much. Falling interest rates will really be the story for 2025.

In summary 2024 will be an improvement on 2023, but the recovery story will be all about 2025.

It looks like we may even get a good summer so enjoy it when it arrives.

I hope you all have great Christmas break and I look forward to talking to you in the new year.