BNZ's Chief Economist Mike Jones has reduced his expectations of house price growth this year and expects a flattish first half.
"We expect about a 5% lift in house prices this year," Jones wrote in the latest BNZ Property Pulse report.
That's down from Jones' previous expectations of 7% price growth this year, published late last year.
"We don't see a lot of action over the first half," the latest BNZ report says.
"High mortgage rates and stretched affordability are restraining demand, essentially nullifying the demographic and policy tailwinds blowing in the market's favour."
"Against this backdrop, the market is struggling to absorb a flood of new listings," Jones says.
"Unsold inventory is at a seven year high."
However Jones expects the market to start to pick up in the second half of the year.
"We expect this chill in housing market activity to thaw as we move into the second half of the year," the report says.
"New home construction looks set to undershoot population requirements, and we'd also expect a boost to demand from likely lower mortgage rates. On the latter, the recent Reserve Bank meeting left us comfortable with our view for interest rates to go no higher and for cuts to begin later this year," says Jones.
The report also says the proposed introduction of debt-to-income restrictions is unlikely to impact the market too much, while an easing in loan-to-vale ratio restrictions and investors' tax changes are described as "mild supports" for the market.
BNZ is New Zealand's fourth biggest home lender with $58.4 billion of exposure.
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34 Comments
Idiots. Seven year high in inventory, loads of mortgage stress, and they only expect house prices go up this year by 40K ? Who are they kidding. House prices will be down this year, like last year. Maybe after they have dropped another 20-30% they will start going up again.
useful idiots
20-30% hahahaha
Keep waiting, you'll probably rent for the rest of your life.
There is already a crisis building as the costs to build a new home are out of line of the resale market. Construction is collapsing
I already own a very expensive home thanks. Mortgage free. I'm not sure why I would want to rent now. Do you assume that everyone that reads the market as on the way down is a renter hoping for a bargain ? I'm quite sure that is not he case, it is just obvious from the variables in the market point to continued drops in house prices, until we get to pre-Covid levels. I don't own rental properties either, I choose to invest elsewhere, mostly off-shore. I may be looking for a cheap holiday home in a few years if you have a highly leveraged one that you are desperate to offload.
Try again
where’s Topliss? Sidelined because he talks too much sense ?
Over the past two years, "The best time to buy was yesterday" has transmogrified into "Prices will start rising again tomorrow".
Falling this year? Nope.
Oh well there my 4 to 5% prediction for this year from months ago finally taken up by the BNZ chief economist.
I said 3-5%, I now doubt it will be in positive territory.
What changes H2 to give the market a boost?
A prediction is a prediction for the year a couple of months before it starts, you don't get to keep on revising it every couple of months or its no longer a prediction is it. Sure it could all turn to shit, a record number of countries are going to elections this year, something like 60 countries, the worlds going up and down like a yo-yo.
Being a Chief Economist is great - make it up as you go. And if you make a mistake, just blame market conditions.
Seriously, their predictions are as accurate as anyone's. The only difference between them and us is they get paid 200k+.
They can employ a young sweet thing for that money, then pull the strings to get her to say what you want. Just like the labour party MO until she resigned.
Like Willis and Luxon too?
They're not about predicting, it's about influencing.
They want to get the party started again. They need to plebs to get drunk on debt again.
Flatter for longer...and longer if inflation is factored.
The link is to a "The Big Short" clip. If you have never watched it the movie it is brilliant.
My favourite scene. “The market is in an itsybitsy little gully right now. It’s just a gully that’s all, just nerves”
I'm thinking of watching it for the 3rd time. Must admit it has probably had more influence on me than it should. I have bugger all trust if any financial advice as a result.
Let the forecast lowering begin.
I agree that we are likely to see lower interest rates soon, but the drops are likely only 0.5-1% at the most this year (unless the brown stuff really hits the fan), that is still very stretched affordability for the current prices people think their houses are "worth". Hard to see how house prices do anything other than go sideways or down from here
Yep
maths obviously isn’t the strong point of bank economists
Or maybe they are just corrupt
https://www.oneroof.co.nz/news/how-much-money-can-you-make-as-a-propert…
Spruiking or bad maths? Economists definitely have no accounting knowledge.
We're all trapped in the asset price growth mantra, and it does not bode well. I'm not sure it's a game that can keep being played and yet we don't appear to have an alternative.
The backtracking has started. Even Tony's newsletter today didn't have his usual ray of sunshine in it.
Because everything is MUNTED, including his past forecasts
House price growth - give me a break.
If they were forecasting goods price growth everybody would be screaming. As economists isn't that what they should be doing?
The disconnect is real, but it's their job and they're tied to it. What's our excuse?
Housing is the only basic necessity where the general population applaud an increase.
It’s absurd, even sick. Isn’t it?
It's deeply entrenched entitlement mentality to free money from housing.
It's the glue holding the middle class and upper class psyche together. There's not a lot else going on in this country; our wellbeing depends on positive property values.
Where is Greg's picture from - with the dirty river running through the middle
It looks like a flood disaster waiting to happen
Ironically it's Christchurch I believe?
Yes, its the area that is now the Red Zone.
We expect about a 5% lift in house prices this year
that's higher than CPI.
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