The bank is still expecting a peak of trough of just over 20% and the market to stabilise next year.
Another RBNZ rate rise, later this month, won’t help, but the bank expects it to be the last.
It will take time, but prices will bottom, and rise again, says Kiwibank chief economist Jarrod Kerr.
The number of sales are bouncing around, the number of days to sell remain frustratingly long, and the rise in total listings reflects the difficulty in selling.
It’s a buyers’ market but they are restricted by rapidly rising interest rates.
“The full force of RBNZ rate hikes, with another coming later this month, will be felt over the next six months.
“The impact of the RBNZ’s heavy hand is already clear. At $780k, the median house price has fallen swiftly from the $925k peak in November 2021.”
Kerr says the RBNZ has helped engineer a correction in the housing market, following excessive moves and “it is upon us”.
Following an expected, and Kerr says unnecessary, 25bp hike in the OCR to 5.5% in May, the RBNZ is likely to pause and assess.
“We believe the tide has already turned. We continue to think the next giant leap in central banking will be an unwind of heavy handed rate hikes. Central banks may be in a position to start cutting interest rates possibly later this year, or early next year.
Such a turnaround will revive the Kiwi housing market.
“We’re heading into the quieter, cooler, months. The true litmus test for the housing market will be made in spring. And we expect interest rates to have turned south by then,” he says.
The bank says it is likely some green shoots will emerge over the warmer months.
“We expect interest rates to fall later this year, net migration is surging back, and there’s still a shortage of dwellings.”
Kerr says there should be some slight gains next year.
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