BNZ's economists are sticking with their view that overall houses prices will increase 7% this year.
"We continue to pick around a 7% lift in national house prices this year," BNZ chief economist Mike Jones says in his latest Property Pulse Report.
"It's a view that, in broad strokes, balances the positive impulse from falling mortgage rates and a recovering economy against the moderating influence of a more balanced supply-side picture," he says.
"Mortgage rates appear to have fallen to a level which is encouraging housing market activity.
"Basically, the numbers are starting to work for people again.
"Higher local authority rates, insurance and maintenance bills are clearly pushing in the other direction.
"But... the net change in cash flows over the past year for the average market participant, will still be strongly positive," he says.
However Jones remains wary of a couple of factors he says could still upset the property apple cart.
- The historically reliable correlation between house sales and prices may not hold up to the usual extent given the unusually strong supply response we've seen in this cycle. Put another way, an abundance of supply means the market is not as tight as looking at sales alone would suggest. Providing some support for this theory, the ratio of sales to listings is still at a level consistent with a mild oversupply.
- Large investment decisions are sensitive to confidence. Buying and selling activity could slow down again from here if rising trade and/or political anxiety causes folk to hunker down until the dust clears. The renewed slump in consumer confidence reported last week is perhaps an early sign of this effect."
"These factors underscore our view that the house price upswing is unlikely to be either strong or linear in nature," Jones says.
"Certainly, we're not anticipating anything like the froth and FOMO of the 2020/21 cycle."
16 Comments
What could only be described as 'an heroic claim'.
The Auckland market gets soft when Trademe has 13,000 listings - it currently has 16,300. More importantly, there is 4,000 new homes listed, up from 3,000 in the middle of last year. So the supply of new homes on the market has increased - despite the fall in building consents.
Well up from the low. And listing are still rising.
The "absolute low-point of stock" nation-wide, which was around 12,500 homes, occurred in the middle of 2021, she said.
https://www.rnz.co.nz/news/business/487229/property-listings-the-lowest…
I am going to listen to this because BNZ have accurately forecast price rises for the last four years.
Just comparing apples with apples - REINZ listings are about 32,400 - trademe is 49,400. That equates with a declining proportion that get listed with reinz. Around the market peak the trademe listings were around 10,000 in Auckland.
I think trademe is winning the race
And here is another reveal, banks trying to influence the market for their own financial gain given their vested interest in residential mortgages for profit. Apparently well paid bank economists can't let stats get in the way of a good spruik XD
The increase is meaningless without knowing the increase in income.
If the increase in income is comparable then it is net sum neutral.
But the chance of that happening is slim.
The indicator for increased income is decreased debt / increased borrowing capacity ie lower interest rates
Unlikely with such high private debt levels, will we see this. Most would move jobs if they couldn't afford the mortgage, or move locations etc, however there aren't a lot of spare jobs at an incomed level agreeable to supporting high interest costs on high mortgage debt currently, especially outside the major centres.
A relative bought August last year fixed 6m @ 6.9% (test 8.?%) 20yrs is currently reducing her term to 15 years @ 4.99%. Repayments ~=.
So, definitely more affordable this year
I also doubt this forecast will reach the reality and I think deep down this Chief Economist knows it. Employment uncertainty is rising once again alongside global uncertainty and insecurity. The price of exposing this housing markets shaky fundamentals for what they are would be career limiting for many heavily vested and selfish individuals. It would likely hasten the demise of many connected organizations that are also as shaky....
I think he was forced to support the party line of his employer who needs new mortgages - even to the extent of contradicting his first mis-speak
'a more balanced supply-side picture," he says
then later he contradicts that with:
'the ratio of sales to listings is still at a level consistent with a mild oversupply.'
We all know the massive oversupply means prices aren't going anywhere this year
Wowee…how dare someone have a contrarian opinion to the interest.co commentators…the pitchforks and burning torches are out now eh team 😂
Wee bit click baity this one Greg, must be eager to the get comments back up 🎣
used to get 150 comments, it must be hitting page impressions = lower advertising sales = lower ratings
sgtshortcut, you clearly have an extensive icon library. I'm really jealous.
Got to use those emojis RP 👌😂
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