ANZ's economists expect house prices to continue to weaken this year before recovering in 2025.
"Subdued sales over recent months and rising listings on the market suggest weakness is likely to persist in the near term, with prices likely to correct further to clear the backlog of supply," the bank's economics team's latest Property Focus report says.
"The Real Estate Institute of New Zealand House Price Index fell 0.6% month-on-month in July, a slightly larger fall than we'd expected," the report said.
"With sales failing to keep pace with listings, recent downward momentum is likely to continue in the coming months, taking house prices lower. That said, there's been some important developments in recent weeks that make these data feel like ancient history," ANZ's economists say.
"After the Reserve Bank began its easing cycle with a 25 basis points cut in the OCR [Official Cash Rate] to 5.25% this month, and signalled there's more to come, risks to the outlook have shifted. Our base case is for the OCR to be cut steadily to 3.50% in the third quarter 2025."
"But despite mortgage rates having already fallen significantly and looking likely to remain on a downward trajectory for some time, a meaningful recovery in the housing market certainly isn't a given," the report says.
"After all, interest rates are falling earlier than expected because broad economic conditions have deteriorated more than anticipated (increasing the Reserve Bank's confidence that Consumers Price Index inflation will return sustainably to the 2% target midpoint). That's flowing through to a weakening labour market, with unemployment on the rise."
"And given the labour market lags the broader economy, that's set to continue for some time, potentially weighing on prospective home buyers' confidence to borrow and invest," the ANZ economists say.
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14 Comments
They also predicted two rate hikes by now.
....coinciding with a 4.5% increase in house prices for 2024.
Seriously, why don't they give up predicting?
They could leave it to the Interest.co experts, mind you, there's not many of us... we're outnumbered 10-1 by DGM's
by Harvey W | 17th Jan 24, 11:57am
Interest rates easing, house prices lifting, buy now
Yup.
HAHAHA....listen to Harvey and your dough is done for.
Just a few months early😁
Self proclaimed experts . Squeak squeak 😊
Crystal ball at the moment.
The government said they don’t want house prices to rise, this to me is the bellwether to follow.
Yes, everyone is acting as though everything will automatically return to a status quo boom.
IF, the Govts. election promises happen, ie to open up the supply of land to meet demand, then the market should stabilize and any rise in property prices should be no more, at best, than to match inflation. This has not happened yet.
And ideally, income growth will outpace house price growth as a % so the median income multiple improves over time.
The median multiple as reported on interest.co.nz is showing some stability. Median Multiples | interest.co.nz
It will be interesting to watch where this goes over the coming year.
I predict that ANZ will make another prediction once their current one fails to pan out as they previously predicted.
Yahoo l must be on a winner. Cause I have done the exact opposite to what their economists have said. Since 90 percent of the time they get it wrong
I think they are not predictions any more, because, as you say they are usually wrong. Maybe they have just decided to say it how is it. Prices are dropping and will continue to do so, but my prediction is that this will continue for a couple more years, not a few more months.
plus they forgot to mention that average cost of interest to mortgage holders hasn't peaked yet, as low fixed rates roll onto higher rates -this is another reason house prices are decreasing
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