The Reserve Bank's increased its house price forecast for next year and now sees prices rising by just over 7% in 2025.
In data prepared for its latest Monetary Policy Statement (MPS) the RBNZ sees house price growth of -0.2% for 2024, but then sees prices picking up in the second half of next year, with the annual price rise seen as increasing from 2.8% for the year to June 2025, to 5.5% for the year to September 2025 and then 7.1% for the year to December 2025.
The RBNZ sees house price growth peaking at 7.4% in March 2026 before gradually declining.
Compared with the RBNZ's last MPS in August, the latest forecasts show near-term prices as quite a bit firmer. In the August forecasts the RBNZ saw house prices rising 0.1% in the year to December 2024 and then rising 4.8% in the year to December 2025. The forecast peak then was lower too - with a pick of 5.9% for the year to June 2026.
Since August the RBNZ has begun to drop the OCR, from 5.5% to 4.25%. Banks have been dropping mortgage rates quickly as well.
Latest monthly mortgages figures from the RBNZ for October show a seasonally-adjusted increase of 3.3% in the amount of committed mortgage money. This follows a 6.9% seasonally adjusted increase in September.
The total of mortgage money committed to in October 2024 was $7.534 billion, which is the highest monthly total since December 2021.
Investors took $1.709 billion, which is this grouping's highest total since December 2021 also. It compared with just $1.021 billion taken by this group in October 2023.
The share of the total mortgage money taken by the investors rose to 22.7% in October from 21.1% in September. It's the biggest share the investors have taken since February 2021 and compares with a share of just 17.7% in October 2023.
The investors' share of the mortgage money really started surging in August, with the grouping that month overtaking the amount borrowed by first home buyers (FHBs) for the first time in two and a half years.
In September the FHBs and the investors actually borrowed exactly the same amount, but in October the investors' tally easily outstripped the $1.563 billion borrowed by FHBs.
The FHBs hit a high water mark in terms of share of 25.2% in December last year and since then the proportion has gradually generally been falling.
In October the FHB share was 20.7%, down from 21.1% in September.
In terms of mortgage numbers the total number of 19,273 loan commitments in October was the biggest in a single month since December 2021.
The 3,068 commitments by investors in October 2024 was this grouping's largest number since July 2021.
The 2,765 commitments by FHBs was this grouping's largest number since November of last year.
59 Comments
Incorrect, they had bugger all to do with house prices bar, lockdowns and closed borders. This is due to 30 years of lowering real interest rates coupled with tax free capital gains that have lead to a cultural and economic reliance and obsession with the cost of housing always increasing, currently to the long term detriment of our country. the same 30 years of lowering real interest rates will not be repeated again. The RBNZ's ridiculously low OCR coupled with removal of LVR limits and the FLP can also be noted as fuelling the fire so to speak.
The "Great Wealth Transfer" continues .... and it won't stop.
Unsuspecting FHB's needing 2 above average incomes ....to buy that crappily built box, without parking
Banks extracting as much cash as they can .....because they can.
Landlords expecting to raise rents anytime .......while their prospective tenants head across the ditch
"Vested interests" in the great PPP lamenting the downturn in the market ....without another arrow in their arsenal to create another income
No, they're not.
Widening your scope of enquiry - both by width and by time - might help.
Cheaper houses can indeed be built, but not while everyone wants to clip the ticket, and live on the clippings at NZ levels of consumption. That ticket-clipping can be partially traced to the massed panic reaction to leaky homes (how dare someone devalue moi?) which demanded ass-covering at every level. But there is more involved - the trend to go for the best-first, leaves a sequence of ever-worse options; often showing up as 'ever more costly'.
Nact were guilty of fanning this fire before the last Govt; as were all from 2000 on. There is no other receptacle for growth of issued proxy, big enough to continue the Ponzi, and hasn't been for some time.
House prices were rising faster than weekly wages for long periods before the peak…but not deemed to be a problem by those in charge of financial stability. 7% inflation of housing for decades but this wasn’t viewed as a problem…even when the wages that are used to pay for these houses are targeted (by the RBNZ) to rise at half the amount! (anyone else see the problem here?!!!) (there is a huge financial hole here..the only solution is for interest rates to never stop falling let alone rise..otherwise that system/model of running the economy falls apart..even with flat interest rates our economy will stagnate..it always needs cheaper debt in the future to allow house prices to rise at 7%..and if that doesn’t happen the economy starts imploding).
But imagine if the CPI basket was increasing in price at a level higher than average weekly wage? And yet housing costs make up the largest proportion of peoples weekly outgoings, and when the price of that housing was going up faster than people could earn money via labour/wages, many viewed this as a good problem to have (as you know, I vehemently disagreed with this as I could see the long term consequences it was going to have on our social ad financial stability as a nation as a whole).
As you mention, the current model for controlling the economy is f%%kd. All it does it promote asset bubbles and inequality.
A number of us on here have been calling this system as BS for eternity. Mr key celebrating the rises was a particularly revolting moment. We wonder why social problems are increasing - main cause is housing, be it rents, mortgages or quality - driven by poor policy and tax systems.
With the economy tanking and young skilled workers leaving on mass, the idea that one of the primary drivers of the mass exodus (housing cost relative to income) is going to get even more expensive is a scary. Watch as social cohesion deteriorates further and further.
Housing costs alone aren't the reason behind the mass exodus since many expat Kiwis choose to live in places where houses and rents aren't exactly considered cheap, e.g., London, Sydney, etc.
That being said, those economies offer much better job and self-employment opportunities for those with certain skillsets who are willing to put in the hard work. We're a lot more hand-to-mouth here in comparison and significantly more exposed as individuals and households to policy moves made by the government of the day and our central bank.
Haha - exactly.
The smart money does the opposite of what Orr recommends - as he consistently does too much of the wrong thing at the wrong time. [which he will keep doing becuase we reward him for it]
Luxon seems to agree with my strategy as he just sold 3 our of 7 of his houses. Now i think 4houseLuxon definitely doesnt strike me as the sort to sell a appreciating asset - especially if its definitely a safe bet. Then I also ask myself what could he know that we dont - and figue maybe its because he is introducing a bunch of policies that seem designed to smash our economy into the ground and get all the smart kids to leave and eplace them with cheap low skilled immgration- he is probably reinvesting in military tech for the NZ police and private education/healthcare - to protect and serve the elite amongst us as society collapses)
But i am sure they wouldnt do that.
Why is the RB predicting 7% house price increases?
In the hope that private debt incresases sufficiently to show or economy as growing again even though it is akin to telling the country on a sunday that they can all have the day of monday, so that they crank the bbq and beers to keep the good times rolling for that short time before reality sets in
Meanwhile in Australia
https://stockhead.com.au/news/house-prices-are-falling-in-sydney-and-melbourne/
Probably about the same time the requests for lower interest rates by those with debt to save 'the economy' fade.
As such, I expect AM will continue to point out the reality of our taxation system for some time to come. Meanwhile the low interest cheerleaders will tut-tut about the laziness, lack of loyalty to NZ and increase in lawlessness of the young because they find dot joining extremely challenging.
Averageman
i would give the argument that the chance for CGT on the home has gone. house prices do that have room to go up like they did in the last decade.
unless the house price to income ratio keeps going up then the making it harder for the average person.
i do though, disagree with interest deductibility.
if house prices rise but the house price to income ratio remains the same, all you are doing is taxing people of the depreciation of their money.
if you talking about CGT tax on investment properties only (like Staya), that is something i am open to considering.
There is a real risk that we have corporate capture of what is meant to be an impartial and independent entity (RBNZ).
That Funding for lending program during/after COVID was highly marginal in my opinion.
Anyone know if there are restrictions on commercial banks hiring RBNZ staff? Ie could Orr move straight from RBNZ to chair ANZ for example?
Yip and imagine if you go out and buy a house now because the RBNZ (economy experts) project 7% increases next year and they turn out to be completely wrong..which is entirely possible given their track record.
I personally think they have no grounds to be giving housing market projections nor should any of the mortgage lending banks - because they are never going to give negative forecasts. So therefore their forecasts are highly misleading and deceptive type behaviour. They only tell you god news stories ie what they want to happen (so you buy their product..a mortgage), not what could happen (both good and bad).
Also, I thought house prices were not part of their primary mandate so why are they entertaining predictions around it? Sure, their policy actions may influence house prices but their commentary should be sticking to their lane.
"Inflation numbers are X, so we need to adjust Y. We forecast that 2 more rounds of Y adjustments will result in Inflation numbers achieving A by Z date."
How dare you try and confine the great Tane Mahuta to a lane.
Tāne Mahuta and our financial system - Reserve Bank of New Zealand - Te Pūtea Matua
I wouldn't expect you to understand with a name like NZDan anyway, you'd need to be an AotearoaDan to pass muster nowadays. Better yet, an ANZDan and move into banking knowing the RBNZ has your back.
Waits for the Xmas spending spree and following centrikd report that will likely report near half a million Kiwis are in arrears just like last year.. but feel free to think all is well in lil ole NZ..... same wheels turning round and round just a different hype.... I know lets sell houses to each other....theres not much else we can do...lol , Looking forward too seeing how well that plan works this time round.... lets not have any complaining when the wheels fall off.....lol
https://www.rnz.co.nz/news/business/510854/half-a-million-nz-consumers-…
The new mortgage lending figure for September was 6.5 b. But total mortgage lending only grew by 3.4b for September. So we can assume that a fairly large portion of each month's new lending is just existing debt being refinanced with another bank. Approx 3000 new dwellings consented for the month needed to be sold/funded somehow. Transfer of debt from developers to investors and owner occupiers. Business debt becomes mortgage debt.
I have a number of problems with this.
1) What the hell is the RBNZ doing issuing house price forecasts?
2) On what basis do they see house prices increasing? and where did they pluck the 7% number from?
3) Could it be that they're trying to jumpstart the currently declining economy with positivity - even going as far to say they're going to cut the OCR in Feb
4) Where is their financial sustainability mandate in all this - we've gone from no interest rate to high interest rate heading back down to low interest rate - none of which provides sustainability as you've no idea what they're going to do next.
5) Are they literally just barking to support the banking sector? i.e. the tail wagging the dog.
6) They've literally just gone to bat get DTI measures to reduce borrowing levels, they already have LVRs, and yet they're out here publicly spruiking for house price rises which inevitably will increase borrowing levels - they can't make up thier mind.
7) Don't get me started on immigration. Incoming immigrants probably can't afford housing (last article I saw stated only 2% of incoming immigrants were 'skilled'). Our youth are leaving in droves because they can't afford current housing prices. To come out and spruik 7% rises in 2025 is irresponsible.
It would be bad enough if this was one of those so-called bank 'economists' - but this being put out by RBNZ - which is supposed to be all about financial stability...
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