In the early 2000’s New Zealand signed a free trade agreement with China, a first for any developed nation. Through this, New Zealand benefited from exposure to over a billion new customers, something that the dairy industry has leveraged very effectively. For the next few decades this relationship served us well and their economy grew nicely, even weathering the Global Financial Crisis of 2008. But after years of growth, the China of today is starting to look a little different. So what does this mean for the New Zealand housing market?
One Third of Our Eggs in One Basket
China makes up 32% of our export trade which equates to approximately $22billion annually. Compare this to our second largest trading partner, Australia, at four billion dollars and it is clear to see that we have really hocked our wagon to the success of the Chinese economy. All chips on red!
One of the issues that China now faces is high unemployment which is particularly problematic in the younger generation. Graduates unable to secure a job in their chosen field are now encouraged to find labour-based jobs instead. Another is the property market. It was once described as a ‘hot potato’ but the sluggish economy has also had a significant impact on property sales. It’s somewhat similar to the experience of Japan a few decades ago; China appears to be entering a period of stagnation (a scenario the Japanese have been battling for years)
The Rural Slow Down
Outside of rural communities and tourism hot spots the public at large have little visibility of how this country makes its money. Decades of discussion regarding New Zealand’s reliance on primary producers has seen little action and we continue to ship off our raw products with little added value.
The recent drop in dairy prices on the back of the Chinese slow down and a glut in dairy products has wiped billions of dollars from the balance sheet of farmers across the country. Combine that with lower sheep and beef prices and declining demand for kiwifruit, it’s going to be a long year for many rural communities. Aside from our three major cities (and Queenstown Lakes), New Zealand towns and cities’ prosperities are directly related to the farming sector. And when the source of the river dries up, there is a trickle down effect to our towns and cities because the farmers simply stop spending.
Construction on Hold
The slow down in the construction industry has started to take effect with building companies and architects noting their pipeline of work has dried up.
The only real positives in the industry are falling material prices and an easing in supply chains as they return to near pre pandemic efficiency. It’s possible that property owners who investigated renovations during the pandemic, only to be put off by absorbent quotes and undefined timeframes, look to reconsider those projects. But with property prices still below their peak, buying is likely to remain a more attractive option, for now.
The Wellington Market
The last few months have been busy with the bulk of our listings attracting good interest. Just last week we ran three auctions with one of our first home properties attracting 18 unconditional bidders!
The increased activity has begun to lift values over the last few months, and we can confidently say the bottom of the market cycle has been and gone. Buyers appear to have accepted that rates are at a peak and this stability allows them to shop with confidence. The most common question at the moment is when there will be more stock on the market. While spring/summer is traditionally a more active time, anecdotal evidence would indicate that the levels will not satisfy the demand.
Wellington Market Quick Stats
What’s on this September in Wellington?
World of WearableArt: BEYOND, TSB Arena, 20th September – 8th October 2023
Enter a portal to another planet as the 2023 World of WearableArt (WOW) Show: BEYOND comes to Wellington in September, bringing the TSB Arena stage to life with incredible works of wearable art.
At the heart of the show is the World of WearableArt Competition. The competition draws designers from across the globe, working in radical and innovative ways in the mediums of fashion, art, design and costume.
Blosson Valley, Aston Norwood Gardens, 14th September – 8th October 2023
Welcome in the change of seasons with blooming cherry blossoms among more than five hectares of serene gardens in Upper Hutt. Each spring, Aston Norwood Gardens transforms into Blossom Valley, a picture-perfect pink paradise. Take in the sprawling gardens, and enjoy the sounds and scents of nature. Aston Norwood is home to New Zealand’s highest number of mature cherry blossom trees. Walk among more than 350 Sakura cherry blossoms, and feel transported to the heart of Japan.
NZ Opera presents: (m)Orpheus, The Opera House, 20th – 23rd September 2023
A reimagining of Christoph Gluck’s 18th-century masterpiece ‘Orpheus and Eurydice’, (m)Orpheus tells the story of a man willing to risk everything for love but unable to find love in himself.
Presented by New Zealand Opera and Black Grace and directed by Neil Ieremia, the collaboration will have a Moana Oceania twist, blending our rich storytelling traditions with the themes of Greek tragedy.