Westpac has revised down its house price growth forecast for this year, and it's a substantial drop.
In the bank's latest Economic Bulletin, Westpac's Chief Economist Kelly Eckhold said the bank's economists were now expecting house price growth of just 2.1% for 2024, down from their previous forecast of 5.8% growth.
The report said the latest, lower forecast reflected recent trends.
"Since August 2023 we have had a relatively positive view of the house price cycle, in that we have expected house prices to outperform inflation more generally," Eckhold said.
"The key driver of this view has been the historically strong population growth seen since early 2023."
"This population growth, which has coincided with a slowdown in the construction sector, has led to pressure on rental markets that we expected would ultimately push house prices higher with the usual lag."
"House prices did pick up slightly from around May 2023 until the General Election and we did see some modest house price growth in the first quarter of 2024 that was close to expectations. However, momentum in the housing market has decidedly slowed since around the middle of last year," said Eckhold.
"Indeed, growth in house sales has been flagging in recent months, just as we would have expected some resilience in market activity based on our previous house price forecast."
However Westpac's economists are expecting house price growth to pick up to 6% over 2025.
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145 Comments
Why are bank economist predictions are never accompanied by #contains advertising? Seems like an abdication of advertising standards? Just because no money changes hands doesn't mean this generic sales pitch isn't designed to influence customer behavior for corporate profit..
When i looked to buy a house 2 years ago i had a 15% deposit, i was told by the bank serviceability was the issue with borrowing what i wanted.
this time with higher interest rates, but lower house prices, i had a 20% deposit and the bank would lend me what i needed.
I've been trying to get out of renting for approx 6 years now, in late 2023 it became possible, although still not easy.
trying to compete with investors as a single income FHB was impossible.
Which also begs the question, if a single income can afford a 3 bedroom house in a decent area, how are prices not affordable.
Greed - intense and selfish desire for something, especially wealth, power, or food.
Can I ask why you decided to call yourself "The Man" on this website? Does it have anything to do with how much wealth you have amassed through being a landlord? You repeatedly say is is not an easy path to riches, so it must have taken an intense desire to get to where you are now, right?
Lol. Someone I know well called me “The man” .
First name I thought of when non de pluming!
Nothing to do with Land lording or investing.
No not an easy path to riches at all, but when mates were at the pub socialising I was renovating, even worked after 9-5 job a long time ago.
If you have the right mind set, have the desire and get good advice if you arent sure, you will do well.
Moaning snd groaning about things will not get anyone ahead.
as an investment its generally considered a yield (income per annum) around 5% of the property price is decent.
It's simplified, of course there are other costs involved. there are also other gains involved.
Do you expect a full financial report of the feasibility of affordability of FHB compared to investors?
No, its speculation... all of it is, all i'm doing is highlighting where things could be it 2 years, as an alternate argument to what seems narrow minded.
I didn't say anything like that so I don't know why you would assume .....
lets say serviceability only ... 550K house @ 20% deposit is a 440K loan.
7% at 440K is $675/week, if that's what you can afford....
In 2 years when rates are 5.5% $675/week will get you a 515K loan.
today you can afford 550K house, in 2 years you can afford a 640K house (515K/0.8).
House prices will be higher, if interest rates are lower, does that make sense to you?
If your numbers stack up it is very decent investment.
It will only be inverted if the house price drops by a further 10% in the next two years. Something that many on here seem convinced is going to happen. Hence the mindless ridicule you are receiving.
For my part I think we are looking at flat nominal prices for the next two years much like 2009-2011. But even if prices came down 10% in 24 months, you will be absolutely fine if your intention is a home for 5 years plus.
Those who have made money from property - via rental yield, capital appreciation and through managing debt competently - are a small minority here. (I guess they've got more exciting things to do with their time.)
But many of those who missed the boat - especially those who sacrificed the opportunity to get on the property ladder just a few short years ago - now feel aggrieved.
For sure, it's become much harder to get a footing on the property ladder now. (Median house prices have risen 60-70 percent since 2016.) People group here anonymously to let off steam. That's okay by me - I'm getting used to it - despite the daily chorus of doom and gloom.
TTP
ToThePoint, thats why I reregistered.
there are just too many posters who are anti anyone who own property, when they do not!
I appreciate most will think I am a Big Head or something along those lines, but that does not worry me at all!
I am only posting the realism of what you can do if you invest in property, admittedly I have done this basically always in ChCh rather than Auckland etc.
This site is meant to be to assist people make better financial decisions, but the majority of posters seem to get some satisfaction and comfort from continually putting down property owners and investors/speculators who keep the economy ticking over.
That's a pretty sad comment from you Yves, but typical of your narcissism I guess. I'd bet that a lot of the people you put in your "hate club" are actually doing ok financially.
Personally I'd love to see property prices to continue to fall and not for my own good. For the betterment of society now and in the future. If you want to hamstring future buyers so that you can make some money yourself with no regard to the negative consequences that's having then that says more about your character than the ones you're trying to criticize. In the past you have called people that can't afford their own homes losers which says it all really.
It's funny the amount of new accounts that have started recently on here that are doing their best to justify house price increases. Goes in cycles I guess. I'm in IO's camp and am waiting to see what happens once yield curves revert to normal again. They've been a reliable indicator of recessions in the past. I don't see things in this country turning around for quite a while. And if anyone thinks that it'll magically come right once the RBNZ starts dropping rates, they're dreaming.
My question is? Why have our Government(s) and RBNZ allowed a low risk, high profit environment for banks to operate in. This is reflected in NZ Banks pro house inflation messaging (using MSM / RE to voice their message)
Currently NZ Banks leading to houses vs business is approx. 65% to 35% in other developed economies these figures are reversed, more leading for business.
The property leading favouritism needs to stop for NZ to move ahead.
When will anyone realise that house price does not equal value, and price growth like we have had in the very short time frame of two decades has accomplished us nothing.
Ideally the numbers should not stack up for investors at all, especially if those numbers are capital gains. Those gains are a result of too much money chasing too little what... which in any other scenario is inflation and not desired. It only adds more instability to financial stability requiring more reactive and insane monetary policy. This maintaining stability of the financial system appears to require instability everywhere else. You would think 87 was enough to warn us yet all we have done is double down - Asian Financial Crisis, dotcom boom, GFC - doing the same thing over and over expecting a different result... insanity. Because all we have now is a combination of all of these and more.
But maybe this is the expected result, at least for those in charge, just not for the masses.
accounting for inflation and exchange rates this year - maybe -10%, given for the last 2 years on that basis its been closer to -25%+
Saying its increased or increasing at all is like giving someone a $5 payrise whilst what he wants to buy just went up to $10 and taking $2 out his back pocket.
Yield curves stil inverted. History shows greatest asset price destruction happens in the period after they normalise. It is possible that the falls we have witnessed the past few years are just the covid froth being evaporated before the real recession/price drops happen. Another 30% drop (in either nominal or real terms) is quite possible in my view - obviously not a certainty as I don’t know how ridiculous any intervention might be to prevent this - but if this happens, our economy/quality of life/living standards will be even worse than they are now as a result of this intervention (eg more money printing, more inflation, more cost of living issues, more housing affordability issues, more welfare required to support those marginalised)- so asset prices might be saved/protected , but at what cost to the average NZ’er?!
The best thing that could happen to this country (and I’ve argued this a while) is a significant drop so that the financial and social instability is removed from our economy that has resulted from house prices that are priced too high restive to our productivity/incomes - the sooner/faster this happens, the better the outcomes will be for the nation in the long run (using a utilitarian moral/ethical lens through which to view the problem).
Sustsining/protecting high house prices is going to do far more harm than good for the majority of people (eg including those who only own one home who have children who want to buy but can’t)
Wont happen in any serious way until we change our belief systems, conditioning towards economic growth, flawed metrics and the whole getting materialistically, monetarily rich. It is all a fear based, divisive game and ultimately we must change the rules of the game.
You need to update your data, it's +2.3% yoy according to REINZ, but 2024 has been negative for a couple of months now:
Thanks for the irrelevant YoY data when the terms of the wager was calendar year. Yep it has gone down the last couple of months … prob about -0.1% each month.
You doomers are picking it’ll go down an order of magnitude larger than that... -1.0% MoM till EoY looolll. Deluded hive mind
Vested interest in keeping up some FOMO, even if they sound ridiculous. If banks collectively confirmed future downward track of nominal prices, they can Not sell as many mortgages, as if they pretend to believe in ever increasing prices. As they have intimate and timely real time data on spending patterns,Business receipts,wage and salary movements, unemployment and beneficiary receipts,rate of increase in loan credit card and personal loan delinquency,in fact ,all relevant data way eay ahead of time ,of RBNZ and Stats nz, etc, there is no way in hell that they are uninformed. So it is deliberate and misleading. Vested interest ,marketing angles for mortgages and other debt,but not truthful.
Yes bank economist forecasts are more profit benefiting propaganda than anything - they would get fired if they ever published truely negative forecasts eg even during a financial crisis. Why they are even given a platform is quite bizarre as all they do is cloud the minds of the people who assume that they are trustworthy. When in reality their forecasts only exist to benefit/protect their own bottom line.
It’s like used car salesman telling that their cars are great and will never breakdown! Such as buy a house using us as prices will never fall!
If they don't hold their net interest margin relative to competitors there share price will fall.....
they would have to get cheaper funding or take less margin .....
they will protect net interest margin hard, if it falls its very hard to push back up in a competitive landscape.
They can’t just drop rates because nobody (or less people) is/are taking their lending!
They have to manage their interest rate risk by matching their debt and credit obligations to balance their portfolio (that is what they’ve lent at given interest rates over given durations with what they’ve borrowed to fund their lending at given rates over given durations - and this has to balance otherwise they create interest rate risk which if it isn’t managed correctly risks defaulting/bankruptcy if their interest rate forecasts are incorrect for future events).
So no because of the mandates set by the RBNZ for prudent lending and interest rate risk, they can’t just drop their own mortgage rates - to do this they need to source cheaper funding first externally (which currently doesn’t exist).
That's me. I'm 32 (FHB) and have a high income but have been waiting on the side lines for years. I fully expect prices to fall further but at some point you have to get on with life and stop micro analysing economic data and reading far too many comments on interest.co.nz every week.
I love the house I've bought, it's close to town, double garage etc. From my observation decent houses are holding up quite well - its all the poorly planned townhouses and run down junk that is cratering the average value.
SBS' 5.99% rate & +$10k cashback made the decision for me. I'm paying about 40% more in interest/rates/insurance than I would to rent the place (more if you count opportunity cost of interest on my deposit) but ce la vie. The added cost is worth it from the perspective of peace of mind and being able to put down roots.
RookieInvestor: "If banks struggle to less mortgage wouldn't that put pressure on them to lower interest rates ASAP?"
Not if they can make better money lending it elsewhere. Or even leaving it with the RBNZ who are currently paying 5.5%. But buying NZ debt (bonds) at current rates makes sense too (in that when i-rates do fall, those bonds are worth more).
Do we really expect their models to be anything other than growth? If 60% of your lending book is residential mortgage you definitely need to keep hyping the market no matter what. Congratulations to those who called the post election dead cat bounce, you were right. We are now back on the downward trend and only an external shock away from complete capitulation.
Agreed.
But from what I can figure out, those " household income increases" for FHB, OOs have been largely eaten away cost of living increases in many other places. Resident property "Investors" with low debt / asset ratios and higher incomes are a completely different story and may re-enter the market with a vengeance if the RBNZ doesn't move LVRs and DTIs quickly enough (which they never do!) ... (Edited: Come to think of it - we might see future MPS from the RBNZ come with not just changes to the OCR but also with 'companion' changes to LVRs and DTIs. Finger's crossed.)
You are correct, Ex Agent, prices in ChCh have not been dropping, there are just not so many buyers able to buy at the moment!
We realise it is not the same throughout NZ, and there are tough times for a lot of property owners.
Was just reading an article from an Australian newspaper about how rental prices have increased significantly over there and how it was not fair!
It is actually no better in Oz than here and will not get any easier as Australian house prices are higher than NZ due partly to the taxes that the Ozzies have on property.
If these taxes were ever introduced here, lookout as house prices and rental costs will escalate.
I wouldnt say languished!
I would say ideal for owner occupiers and previously investors and now speculators!
Too many nowadays expect everything go be given to them without doing the work or looking for opportunity.
Chch is a far nicer place to live than Auckland without the major problems.
Ex Agent, no wouldnt have rentals in Auckland at all.
Too far to travel to do any improvements, rental return is poor and can not make the % profit that I can in Chch!
I do love being financially comfortable, Not love of money, more that I enjoy the lifestyle and the enjoyment of buying right and improving!
Everyone on here says banks are terrible at making predictions but yet they all think their predictions are better?
aren't the banks the ones that have the data to actually justify them, or the experience to understand?
why aren't the predictors on here working at the banks if they are better at it?
I doubt there are too many investors actually buying to rent out at the moment.
This is going to put pressure on prices and a shortage of rentals and therefore there are going to be quite a number of prospective tenants not able to get a rental.
Landlords are far less likely to take some people on nowadays unless they check out totally.
I would say a lot of the previous investors could now be called speculators, as opportunities pop up!
Rental listings up 40 percent across country in three months to May
"the number of rental seekers has increased by just 2.5 percent."
"An Auckland Ray White property manager, Shane Ryder, said it had been noticeably harder to rent out homes since April."
When we put a property up for new lease anytime of year, there are that many that want them!
We are very thorough with the screening of any tenants that we actually show through, there are plenty that you would not want.
Rents for new rentals this past year have increased up to $100 per week
He's been booted off here before and is back for another go. Usual me, me, me posts from him. Seems to think his anecdotal experience is more important than any statistical data out there.
https://www.interest.co.nz/property/98416/sales-around-third-properties…
(Check the comments)
Now that investors can buy existing properties, they should be back in the market. There are much better yields on older properties than there is on brand new ones. So you might actually be able to find something that is cashflow neutral if not positive (with a 40% deposit). As an example, an older unit in my local area will rent for a 5.7% yield while a brand new unit will rent for a 3.8% yield.
At least until the prices of those brand new units fall to match the price of the older units, and going by the surge in listings of recently completed 2 bedroom townhouses in my area, that won't take long. There are four townhouse development projects underway on the street over from me - the first to complete earlier in the year sold all bar one, which is currently for sale with a $50k price reduction. The second development across the road from it has only sold one out of four so far. I wouldnt want to be the developers of numbers 3 and 4 due to hit the market later in the year!
When they increased the Brightline to 10 years, many investors decided it wasnt worth buying anything to rent out with low yields, 10 year Brightline and losing the right to claim the legitimate interest paid from your tax!
The business plan changed to speculation!
It says nothing about flooding. It's elevated, got terrific north-facing view, is 4k from one of NZ's biggest shopping centres, there's a ton of water under the place for my bore, adjacent to motorways, near to a future 422 apartment retirement village, and hundreds of acres owned by a Fletchers consortium. And there's a lot more going on than that out West
If there was thing going on between your ears you'd be sussing it out. But as Nathan Rothschild once observed...."buy on the cannons, sell on the trumpets".
This amazing property just keeps getting better and better each time you describe it and you got it at 30% discount.
Given you're pushing everyone to buy in the same area can you post some links to similar properties that meet these criteria your amazing property has also selling at a 30% discount?
What sort of idiot is selling this surefire bet? Why aren't they holding and making a killing like you?
Well actually my wife found this particular property. She's quite canny, and reckons this one will be the best property we've ever owned, which is quite a few.
The last time she found a property I wasn't that keen on it, but succumbed to her charms and purchased it. We sold it for just under $2m more than we paid for it.
Which I think you'll agree, is not too bad.
I could write screeds about the research I've done on that area, but I'm afraid you guys will have to DYOR.
https://www.oneroof.co.nz/news/us-buyer-snaps-up-luxury-home-with-its-o…
So you reckon the bubble we had pre-covid and the bubble on the bubble during covid has re-set itself?
Never mind job losses, reduced hours, liquidations, rates, insurance inflations, cost of living inflation?
Or our brightest being replaced with uber drivers with minimal income.
Can't see how the bottom could be in.
I don't live in Riverhead but I own a few acres there. Everything in Riverhead is selling. I've already posted a huge list of why that's happening, so it might be a surprise to you, but it's no surprise to me.
I've been tinkering with property for decades, and this one is the most promising yet.
I am assuming from your name you are in my hometown of Kerikeri? The market looks pretty grim up there. I expect because of the brynderwyns being closed. Once it re-opens the backlog of housing stock can start to be cleared. I feel sorry for anyone selling up there at the moment.
I'm not sure why economist's bother making predictions on house prices. Currently they make a prediction , then change it, then change it again and then still turn out to be wrong - doesn't do their credibility any good . Better to make a prediction and stick to it or better still make no prediction at all.
Funny, everytime someone posts the new real prices that houses are being sold at someone like the man comes in with a comment about how there must be something wrong with it. It is literally too hard for them to even imagine the possibility of a crashing real estate market in New Zealand, even when the actual facts are there for everyone to see.
It's certainly a bad thing if you want to make money.
https://www.nzherald.co.nz/business/former-anz-boss-david-hisco-doubles…
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