House Prices

Weaker than expected

ANZ is predicting house prices to fall 0.4% over the rest of the year, versus the 0.2% rise it had previously forecast.

Wednesday, November 29th 2023

Nationally, house prices are still a long way below their peak. ANZ is forecasting it will take years to reattain those levels.

Chief economist Sharon Zollner says the bank is waiting to see November’s post-election REINZ data before making any more significant adjustments to its forecasts.

She says it’s not just house prices that are on the weaker side – the indicators for sales and new listings show there is further softness to come.

House sales ticked down in October across all major markets. House sales have a tendency to be volatile month-to-month, but ANZ says it will be watching closely to see if this resumes last year’s trend of a weakening housing market, or whether it’s just a hiatus awaiting policy certainty.

Also indicating weakness ahead, new listings are (just) above year-ago levels for the first time this year. All else equal, this extra supply will make it more difficult for house prices to rise meaningfully over the next few months.

This lift in listings is on top of an already large stock of inventories, which needs to decline before meaningful rises in house prices are likely.

The weakness in some of the indicators and some technical seasonal adjustment factors have prompted the bank to make the small downwards revision to its outlook.

“It is difficult to separate election inertia from underlying housing market momentum in recent data,” Zollner says.

“In the meantime, the risk is that house prices rise less than we expect next year, given recent modest further lifts in mortgage rates and the somewhat faster-than-expected labour market loosening.”

She says the faster than anticipated restoration of mortgage interest deductibility and other landlord-friendly policy changes agreed to by the new coalition Government are risks in the other direction, though difficult to quantify.

“New labour market data, with unemployment rising as tighter monetary policy cools demand and raises unemployment.”

Dropping job security is likely to make would-be first home buyers more nervous about taking the plunge. “But there’s also a feed-back loop here.

“Sharply rising unemployment can negatively influence credit availability too, making the outlook all the more uncertain for credit providers,” she says.


No comments yet

Heartland Bank - Online 6.69
Unity 6.99
SBS FirstHome Combo 7.05
ICBC 7.05
China Construction Bank 7.09
Co-operative Bank - First Home Special 7.09
Wairarapa Building Society 7.15
ANZ Special 7.24
Westpac Special 7.29
ASB Bank 7.29
BNZ - Classic 7.29
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
TSB Special 6.75
China Construction Bank 6.75
ANZ Special 6.79
Unity 6.85
BNZ - Classic 6.85
ICBC 6.85
ASB Bank 6.85
Wairarapa Building Society 6.85
Westpac Special 6.89
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
BNZ - Classic 6.55
ASB Bank 6.55
SBS Bank Special 6.59
Kiwibank Special 6.59
AIA - Go Home Loans 6.69
Co-operative Bank - Owner Occ 6.75
TSB Special 6.79
Westpac 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

More Stories

BREAKING: OCR 5.50% - Monetary Policy remains restrictive

Wednesday, February 28th 2024

BREAKING: OCR 5.50% - Monetary Policy remains restrictive

The Monetary Policy Committee today agreed to hold the Official Cash Rate (OCR) at 5.50%.

Sales dive to new depths – lending at low DTIs

Wednesday, February 21st 2024

Sales dive to new depths – lending at low DTIs

House sales have plunged to their second lowest level in about 40 years, only 2% up on January’s sales last year, which were the lowest since 1983.

DTIs will have no significant impact on house prices immediately

Tuesday, January 23rd 2024

DTIs will have no significant impact on house prices immediately

The Reserve Bank doesn't expect its proposed DTI restrictions to have a significant impact on house prices in the short-term.

RBNZ gives details of new lending rules

Tuesday, January 23rd 2024

RBNZ gives details of new lending rules

The Reserve Bank has reveled its proposed debt-to-income (DTI) restrictions alongside plans to loosen loan to value ratios (LVR) for residential lending.