House prices set for slump
Thursday 2 December 2004
House prices are expected to slump as much as 9 per cent in the worst-hit areas next year, knocked back by rising interest rates and fewer migrants, according to a new report.
By The LandlordThe average price fall was expected to be about 4 per cent, according to a report issued yesterday by mortgage insurer PMI and Infometrics.
Wellington house prices may dip a little next year, but rise again in the following two years.
The report says Nelson and Marlborough were "first to the party" in the boom times and were one of the first to leave with 7.5 per cent falls in house prices likely next year.
Sales volumes there are already down 30 per cent on the same time two years ago.
After peaking at $286,000 in December 2003, median house prices are now fluctuating at between $248,500 and $275,000, the report says.
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Periods of house price decline are rare and "short-lived", says economist Tony Alexander, amid forecasts of a drop of 10%-15% this year.
The Reserve Bank says the commercial property sector is vulnerable to the Covid-19 crisis. But PMG Funds' chief executive believes that while there’ll be short-term pain, the biggest long-term impact will be structural change.
Mortgage lending fell to its lowest level on record last month as the property market ground to a halt during the Covid-19 lockdown.