ANZ economists are sticking with their view that house prices will rise 3% in the second half of the year but now say that "risks appear skewed to the upside".
In ANZ's latest Property Focus, ANZ chief economist Sharon Zollner, senior economist Miles Workman and senior strategist David Croy said housing data for July provided further confirmation that the house price cycle has turned.
"In July, the REINZ House Price Index (HPI) was 1.4% above April’s cycle low (after seasonal adjustment), with 0.6% m/m increases seen in both June and July," they said.
Annual house price inflation has "turned a corner", at -8.9% year-on-year on a 3-month moving average basis as against -10.6% in June and a low of -14% in February, the economists said.
"On balance, housing indicators suggest the market remains on a tightening trajectory."
They said auction clearance rates in Auckland continue to trend higher (signalling some upside risk to both ANZ and Reserve Bank (RBNZ) forecasts, and inventories are trending down despite relatively weak sales.
"Sales tend to lead prices by three months or so, suggesting our expectation that price momentum will fade a touch towards the end of the year is valid. If new listings remain weak enough to keep inventories on a significant declining trajectory, we could easily be surprised to the upside on prices. But our baseline assumption is that if sales do hold up, sellers will be drawn into the market as they realise that it’s become an easier time to sell," the economists said.
"All up, we certainly wouldn’t call the housing market strong, but it is does appear to have turned a corner, and it would be imprudent not to acknowledge that risks appear skewed to the upside, at least in the near term.
"We maintain our forecast that house prices will lift around 3% over the second half of 2023, before moderating as deteriorating job security, lingering unaffordability, and the reality of high-for-longer mortgage rates sets in," Zollner, Workman and Croy said.
But they acknowledged "there are so many potential sources of surprise".
In terms of risks from Consumers Price Index (CPI) inflation, they said that if this proves persistently strong -whether that’s related to a stronger-than-expected housing "impulse" or something else, such as inflation expectations becoming unanchored - then the Official Cash Rate would very likely have to go higher than currently generally expected, "and that wouldn’t be good news for house prices".
"Conversely, there is a ‘we get lucky’ scenario, where current high non-tradable (domestic) CPI inflation (which tends to be the sticky kind) slows faster than we anticipate, to the point that the RBNZ can deliver OCR cuts earlier than anticipated.
"But unfortunately, perhaps more likely is that if we do see a downside inflation surprise, it’ll come via a nasty economic shock. And while that may justify a lower OCR, it could also be accompanied by a sharp fall in household income and/or a credit availability shock (eg a global financial shock), and the net impact on the housing market would be unlikely to be favourable.
"All in all, while upside risks to our near-term house price forecast appear to be mounting, risks to the medium-term forecast are very much two-sided. The ‘we get lucky’ scenario is but a wafer-thin layer of pastrami nestled between two very fat slices of bread."
62 Comments
Aussie is the most common destination for high net worth migrants.
NZ is 7th.
Australia and NZ have different points of attraction for HNW migrants, but it also appears Australasia is a very popular part of the world for people with money to move to.
If you can't envisage why people want to live in NZ its strange you bother persevering with the place. The world is full of non-NZ-ness to fill your boots with.
Pa1nter yep alot of people need to get out mode and travel NZ go to Queenstown or Wanaka and see the HNW overseas people buying up. Alot of bunkers getting built. And since the little forgotten war is still going on and not likely to end soon and the chance someone might press a button. Alot of Northern Hemisphere HNW people view little old back water NZ as utopia. And they like our snow hence why they don't go to Aus
I think we’ve seen that interest rates and credit availability matter not just more than the real economy, but much more - in the realm of RE prices. The housing market could see fantastic gains with unemployment at 90% if credit were easy enough.
I can foresee a scenario where global credit is tight but the RBNZ decides they need to loosen because things aren’t looking great here - more pressure to come on the $nz…
Extraordinary, isn't it? The late morning article was "ASB economists say Kiwi households are 'rapidly clamping their wallets shut' but house prices are going to rise?! Incomprehensible to me.
Extraordinary, isn't it? The late morning article was "ASB economists say Kiwi households are 'rapidly clamping their wallets shut' but house prices are going to rise?! Incomprehensible to me.
Part of the psyops and tactical warfare
"there are so many potential sources of surprise".
There's the media release's get-out-of-jail card (just our opinions and for entertainment purposes, not financial advice).
The ‘we get lucky’ scenario is but a wafer-thin layer of pastrami nestled between two very fat slices of bread."
You can take away anything you want from statements like this.
We went to an open home on Saturday, it's a new development with four houses and just one of them is for sale. We asked the reason why the rest weren't and the agent told us that the developers are waiting for National to win and start changing some of the legislations, including opening the house market to the foreign buyers, and the prices will go up again. Maybe this is the 3% that Sir John Key is expecting from the market. It makes me sick.
Balancing the numbers on a serviette is one thing, finding a tenant that can afford rent in a downturn is a whole different ball game. Seems to be a fair amount of eager bag holders waiting for this election, voting for the party who want to come in an cut spending on silly things like wages that pay mortgages and rent. It's ok though, we'll sell off our country to overseas investors and all will be good again.
"there are so many potential sources of surprise"
That's one large (get out of jail disclaimer) alongside their prediction right there!
What will bring the buyers our in force is collective belief borrowing costs are declining, increased job security together with even cheaper houses. Household budget stress is spreading not only here but across the Tasman as well.
We haven't seen the real downturn yet.
The question is why are they even saying anything or come out with these predictions. Very often they have been wrong. From my experience there is always a reason someone will come out and say something. Are they trying reassure first home buyers that now is a good time to buy and they shouldn't wait, to get the housing market back on track and prices rising again? Deflation, which is what has occurring in the housing market, causes markets to stall, as people hold off buying something that maybe cheaper if they wait, and apparently deflation can be worse than inflation for the economy.
Agree. Banks elsewhere don’t publicise their speculations over such arbitrary timeframes (next 4 months). Also the excuses for a poor forecast are many which made me ask the question: if you are not certain why say anything publically at all? The answer, of course, is their vested interest in the housing market sustaining momentum
If you look around you so many people living in cars or over crowded conditions time for the government to stop housing ponzi people should not be able to have multiple properties and push up prices for houses or rents, so much social breakdown most young couples have no chance of buying a property and many are leaving to other countries.
Maybe allowing them to also withdraw the $1000 kickstart. Maybe also allowing people to redirect part of their employee subsidy and their own contribution that would normally go into KS, into their mortgage? All this helps increase house prices, as it allows people to be able to afford to service larger mortgages. Banks increasing the mortgage duration I think is also likely, especially with super and KS withdrawal eligibility likely to go up to 67.
That sounds like a nightmare scenario, spend all the extra cash you struggle to save for something you should be able to buy at a cheaper price, homes. All because people are bonkers and leverage themselves to the hilt. If people can just chill, watch prices drop, let the higher interest impact the over leveraged, watch more listings come onto market, then we will be able to leave our savings alone, and spend on businesses other then banks.
So ... ANZ's 'bank economists' predict:
1. That interest rates will rise further
2. That house prices will rise
Can they be right on both count? Absolutely. Friggin'. Not.
It must be apparent to everyone now that these people - 'bank economists' - are as slippery as real estate agents.
No. Unfair to real estate agents. Let's try: As slippery as right wing politicians trying to get elected that still haven't released their budget! This has Key's grubby mitts all over it.
Don't worry Zwifter ----- you will probably be right about one thing........in 2027. House prices rising a little bit, annually.
You know the international rule, major property crashes, that we are 100% certainly in now, in the early stages of within NZ, take on average 6 years to play out.
Have you not been observing anything?
Sorry you are horrendously overbought on housing, but thems the breaks aye:)
Single house that I live in NZGecko and I'm mortgage free. I can sit on the side-lines now and just throw predictions about. If National/ACT get in which is guaranteed according to the scrolls then expect things to pickup. Yep been watching housing for years, you wouldn't want to bet against it long term in this country.
again with this mythological longterm bs
given enough time everything is possible, how much is your longterm
20 years? demographic collapse
40/70? inverted sea currents
200? we are probably on mars
50M? andromeda is joining the milkway and happily moving to the great attractor
My take on this is that they are saying there is a slight chance (thin slice of pastrami) of a very modest increase for the rest of the year, but in 2024 and beyond the odds are good (two fat slices of bread) that there may be more significant price falls.
What should be obvious is that NZ house prices will continue to decline as long as:
1) they are wildly out of line with average incomes (which they obviously are), and
2) interest rates stay at this level or go up
I called the high inflation decade to persist through the 2020s and a housing crash in mid 2021.
SPOT ON.
What will occur from here, for the next 4 years is moments of spruiking (sustained malfeasance) success , caused by the exposed parties, whose actions/comments and shameless promotions of property collecting, have and will still send many to the wall and the poor house of mortgagee sales (Banks/Oneroof/Tony Alexander/Ashley Church)
There is no way in hell that this current dead weight of property debt (untill the average gets back to 4 to 6x DTI) can in any way be levitated to go on any sustained run higher.
Restrained Sellers hitting the market hard in Oct/Nov/Dec 2023, will swamp the buyers and BIG cuts in prices to try to clear a massive overhang in stock.
We got 4x more year of a lowering lid on housing prices.
I expect a BIG BUMP down mid next year as the RBNZ whacks on the much lower DTI lending rules.
It all looks obvious right?
Potentially. A few years ago none of these experts ever predicted that house prices would crash nearly 20%. I think people should trust their instincts. I didn't and I ended up buying an overpriced house near the peak of the market that is now worth less than I paid for it. I told people thatknowing my luck house prices would drop and this situation would occur. LOL .
Still more hurt to come I would think too. Interest rates aren't going down anytime soon, inflation still high-ish , businesses slowing in retail, more un-employment predicted as business down size or cuts roles. I also think its gonna be a slow burn for a couple of years unless they open the flood gates on imigration and National introduces tax relief on rentals which they need to do to get investors back in the market to provide rentals for people in places such as Q-town.
ANZ are just trying to get more mortgages sold. They need to get the record profits back up to another new high.
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