Property prices under pressure
Wednesday 2 June 2010
Property prices are still under pressure as households keep debt repayments as a top priority for the year ahead, according to the ANZ New Zealand property gauges.
By Paul McBeth
Two of 10 gauges predict prices will fall, one is neutral with a negative bias, four are neutral, two are neutral with a positive bias and one is positive.
"Supply-demand dynamics are positive, but de-leveraging remains the number one priority," the bank's economists said.
Liquidity and serviceability/indebtedness were the two negative gauges, as borrowers keep paying down their existing debt, while demand for credit is still subdued.
Interest rates were neutral with a negative bias, with the Reserve Bank set to hike the Official Cash Rate in coming months, which will lift floating rates.
Supply-demand balance and consents and house sales were neutral with a positive bias, as home sales remain low and new building consents lag behind demand.
Migration remained positive for prices, though departures to Australia is beginning to pick up and net migration is easing.
Globalisation, mortgagee sales and median rent were neutral.
On balance, the bank's economists said direction for house prices was neutral with a negative bias.
Commenting is closed
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.