ANZ's economists are picking that house prices will fall further over the coming months, even as mortgage interest rates continue to decline.
"Housing market momentum continued to weaken in August, with no sign as yet of a flurry of sales following the RBNZ's first OCR cut last month," they said in ANZ's latest Property Focus report.
"Sales volumes remained weak, while inventories on the market rose further, suggesting that house prices are likely to correct further over the coming months in order to clear the backlog," the report said.
However the report also acknowledged that the market remained volatile and could change momentum quickly.
"Anecdotal evidence has pointed to a pick up in activity over recent weeks, and Barfoot & Thompson's Auckland auction clearance rate has bounced, highlighting the risk that the housing market could be spurred back to life quickly as interest rates fall," it said.
However ANZ's economists remain cautious about how quickly interest rates will fall.
"Mortgage interest rates have continued to head lower over the month, driven by falls in wholesale rates as financial markets have ratcheted up bets that that the RBNZ will step up the pace of OCR cuts to 50bp moves," the report said.
"That's not what we're expecting, but it's worth remembering that faster cuts from the RBNZ would likely occur in response to the economy underperforming the RBNZ's already low expectations.
"In that scenario, lower interest rates may not be the boon for the housing market that many assume."
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81 Comments
That's nice for you. Maybe you purchased in 2017 or before. But, look out, seems those prices are on their way back. So, maybe you have to exit the game before the music stops and you don't have a chair to sit on any more. Personally I don't care, I was never dumb enough to leverage myself with property during the fake market after covid. Many are going to lose everything over this, maybe you included. I'm with retired poppy on this one. People who continually promote property in crashing market are generally just soon to be bankrupt spruikers looking to offload to a greater fool. The only good thing about it is there will be a bunch of cheap(er) property around in 1-2 years if one wants a bach or something.
Ah yes, you lot are imaginative. Or just plain stupid based on what you type on here.
Not sure where you came up with that dream , but stay off the crack. Continue preaching your advice, you’ve got some real credentials behind it. The irony in your username though……
You do realise that not every investor is a “leveraged spruiker” right? That’s extremely narrow minded.
I don’t think most people would take yours or RPs advice purely based on your position. Similar to having a personal trainer that looks anything like a personal trainer.
Some of you lot spend your lifetimes trying to time markets whilst never buying and calling everyone spruikers. That’s the main point here.
Of course. Not all are, but it appears you might be. If I was to advise people, I would advise them to not invest in property at all (except the family home of course). I invest in share-markets, mostly overseas, and have done so for my whole life. The biggest investment gamble I ever took, was a) not selling anything during COVID, then once the markets were crashing I decided that COVID was not going to be the end of the world and b) dumped a heap of cash into the market at the bottom. Turned out to be a great move. I have no leverage at all, but I could buy half a house each year with the profits from my non-leveraged investments.. I think that's better than being a leveraged spruiker.
Is there a right time to bring in a universal Capital Gains Tax on any secondary property(s) or remove Negative Gearing? Probably politically not. But as Antonia Watson suggests, one day someone(s) will have the courage to do one or both. And if there is ever a good time to do that, it's when prices are falling and the impact is minimal or zero (as there is no CGT on a property when prices are falling and NG diminishes likewise)
Now. Where are those courageous politicians who could link this in with the necessary taxation changes that are outlines in the other article on here today that tell us - we have to do something, as what we are currently doing is unsustainable given our demographic outlook.
I guess you can discuss the theory all you like. CGT isn't happening. National have ruled it out, and they will be here for 3-4 terms. The version of CGT that Labour proposes is at the marginal tax rate, so you would be paying 33-39% on CGT, so that will never ever fly. Until someone starts proposing a CGT of between 10-15% which excludes family home etc, nothing will ever happen.
It's not rocket science.
i) Current government has ruled it out.
ii) Governments generally go in cycles in NZ, 3 terms is the norm, except if you are hopeless like the last Labour govt and Covid saved them from being a one term govt.
iii) National generally last three terms, Labour don't usually but have once or twice.
Is there something I missed, except knowing the lotto numbers ?
One thing I do know for sure. Labour are unelectable for the foreseeable future, and have no coalition partners that are even barely acceptable. So, whilst this situation continues, National and their partners win by default. Competing with Labour right now is the equivalent of playing a game of football against a team with 9 players and no goalie, and the players that are playing have a strange habit of kicking the ball into their own goal.
I think the real lesson to be learned from watching politics is to be humble when making predictions and to recognise that things can change, fast.
Perhaps you remember the massive swing in Labour's favour when Ardern took over as leader, just as an example? Couple of nasty scandals, some in-fighting within or between the coalition parties, economic damage...plenty of possible causes for the population to swing.
Yes, I agree. But, at the moment Labour are in a warriors like position. Making a lot of noise, and making promises, but totally hopeless and out of touch. They will come back, but they don't have the people right now to do it. Labour is made up of a lot of different factions, and moving them forward is a lot more difficult than it is for the Nats and so it takes a lot more time. hence three terms minimum.
Labour won the 2020 election with a landslide victory, so the exact points you're making right now could've been applied to National after the 2020 election. Things can change very quickly in politics, just as they do in life. Predicting election results a decade out is naive at best.
Just the usual partisan hyperbole. National themselves are looking almost as incompetent as Labour at the moment and averagejoe is feeling insecure about it.
So he resorts to emotionally charged exaggerations to try further undermine Labour's incompetence and lazily wedge a slight point of difference between the two parties. Easy to do when National were voted in, and Labour voted out.
Because most property investors that partake in negatively geared investments are either cash poor, or don't have the means to reach their ambitions without a huge early hit to the cashflow. They're primarily releasing equity and borrowing the rest, and being negatively geared today is gambling that over time they'll reach a positive cashflow position, or be able to sell for huge tax free capital gains.
Since losses are carried forward, by the time they extinguish those losses in profit making years they're usually ready to sell.
You can still negatively gear your investment, it's just that your losses are ringfenced so you can no longer offset the losses against your personal income for a tax refund.
Someone might still want to have a negatively geared rental property because it's the only way they can realistically obtain the asset, by topping up the holding costs from their own pockets in the short term.
I don’t believe Bishop for one second. His government have proven to be comfortable misleading and manipulating the public at every turn. Bishop has increasing rental supply as his main focus. So in other words, more investors. Investors don’t like falling markets, and neither does this government.
You missed rents falling
https://www.oneroof.co.nz/news/tony-alexander-landlords-drop-plans-to-r…
No Shist Sherlock ANZ.....the crash is only 1/2 done.
2015 to 2018 home prices are coming soon- DONT OVERPAY!
But but but......Tonay Alexspriukerzander promised everyone a good 10% gains this 2024 year.....can his disciples get their money back? King of the swamp - Winger, can apply to the FMA, for winding old TA up?
Looks dead cert for ITG -10% or larger.....
This has been my consistent view for the past few years - that house prices may well continue to fall with interest rate drops - as a reflection of just how bad the economy has become.
This happened in the US during the GFC when I was living there - recession hit, interest rates were dropping but not many people were in a position to take on debt to flatten out the housing market (or increase debt levels to cause it to rise).
Once unemployment peaks and interest rates have stopped falling, then in my opinion we may see the market flatten out and start rising again - but that could be a few years away. Not a forecast…just an opinion based upon my experience in the Us when their housing debt bubble popped (which ours appears to be doing right now).
Other people’s experience says house prices always go up as soon as rates fall - time will tell (and I will be ready to admit I was wrong if this happens).
Agreed, just like inflation still going up while the rates were hiking…not surprising to see house prices continue fall as rates go down…I think in 12-18 months things could look very different. In the same vein that I think those who expect prices to jump on one cut are naive, I also think those that think prices are still going to collapse a lot more from here are as naive as well.
Only time will tell, my guess, another six months of small declines, 6-12 months plateau then I would think we see some increases…hopefully DTI/LVR used well to control any stupid leaps up eh
We're smack bang in the middle of peak buying season. This is as good as it gets. 3 months until Christmas, plenty of time to get moved in before Santa comes. Auction clearance rates low. Sales inventory climbing. Interest rates moving very slightly down, with the expectation for the rates to settle around 5%. Migration low, and possibly more skilled people moving to Australia as work dries up in NZ. What's going to drive house prices up from here? Demand is low and potentially will get lower with unemployment increasing.
Last week alone I've heard of 3 people from work who are leaving to OZ and my neighbor. All of them are immigrants who got their nz citizenship and got offered a much higher base salary there (not to mention the 11% super). My neighbor mentioned the estimate rent price he expects to pay in Perth is lower than what he pays here for a better house.
Even I am considering now haha
When you get an email at work about needing to find 8-figure savings for FY2025/2026, right after a year of heavy cuts, it’s not exactly the time folks are thinking about rushing to buy houses. Who's next? That’s the question on everyone’s mind. Most are probably tightening their belts, just in case. In a balance sheet recession, where assets are dropping but debts stay high or even climb, the priority for most shifts to sorting out personal finances, not house hunting. In a debt-based economy, when interest rates (OCR) outpace growth (GDP), we are essentially watching the economy being strangled slowly while debt explodes. Looks like the next 12 to 24 months could be a grim repeat of unemployment spikes, demand crashes, and more liquidations.
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