insights on NZ real estate market | june 2023

Enrique Blanco de Cordóva, Principal, New Zealand shares his insights on the region and reports the market for development has experienced a cooling down in sales recently due to several factors influencing buyer behavior and market dynamics.

One key factor is the implementation of government measures aimed at curbing speculation and improving housing affordability. These measures include:

• – stricter lending criteria
• – higher deposit requirements
• – higher and changing construction cost, and
• – restrictions on foreign buyers.

These regulations have created a more cautious environment, leading to a decline in sales activity. Additionally, rising interest rates have made borrowing more expensive, deterring some potential buyers from entering the market. As the cost of financing increases, it becomes more challenging for individuals to afford property purchases, particularly in the higher price segments. Uncertainty surrounding the economy, job security, and global travel restrictions has caused many buyers to adopt a wait-and-see approach. This cautious sentiment has resulted in decreased sales volume.

At the same time, the demand for retirement accommodation for over 75s in New Zealand remains healthy and consistent. The global numbers and the penetration rate is close to 14% and increasing in 2023. On paper, this is positive for NZ operators, however NZ retirees find increasing challenges to downsizing. As the cost of financing increases, it becomes more challenging for them to afford property purchases.

For operators – as with challenges, come opportunities – there are decisions to make this year:

1. To stay put and spend their budgets on upgrades of the existing assets,
2. To wait for a positive economic upturn, this could be problematic if it does not happen soon or,
3. To tap into a different seniors’ models in line with global trends in the seniors market to cater for ‘late’ baby boomers (baby boom 1946-1964) and Generation X now over 55 years-old as savvy lifestylers.

Developers may want to adjust their strategies to align with the changing market conditions, focusing on targeted marketing, innovative designs, and appealing incentives to attract buyers.

One of our Australian properties, Akoya, for over 55 CAP is an example of how innovative design has led to good outcomes and property sales are strong. We are witnessing baby steps for this model in Auckland and this is a market niche opportunity for our clients. 

At Marchese Partners | Life 3a we have been talking to our clients about the need to recognise this trend and explore feasibilities around opportunities as operators would benefit from future-proofing their developments, Generation X is already here.

The New Zealand team has many more insights to share with operators in the region.

Contact Enrique de Blanco de Cordóva to find out how he and his team can help you take the next step with your property planning or upgrades and employ global best practice with a local focus.