ANZ's economists are expecting the Reserve Bank to make two further 25 basis points (0.25%) cuts to the Official Cash Rate (OCR), which should provide a lift in house prices later this year.
"We still expect more meaningful lifts in house prices in the second half of the year, but are now forecasting a lift of 4.5% rather than 6%," they say in their latest Property Focus Report.
ANZ is the country's biggest home lender with total loan exposure of almost $110 billion as of December 31 last year.
Given recent "tepid" domestic data and headwinds to confidence from global economic "ructions," ANZ is forecasting the OCR to be cut to a low of 2.5% in this cycle. It's currently at 3.5%.
"That will underpin housing market momentum further out," the report says.
However, the ANZ economists also point to several challenges in the latest housing market figures.
"Sales volumes continue to trend higher," they say.
"However, those looking for resultant meaningful price action are being stymied by the fact that housing supply is also lifting, as those who have been holding off listing their property for sale grab the opportunity."
"Plenty of choice for buyers means little upward pressure on prices," the report says.
"Indeed, of late we've seen house sales and house price inflation heading in different directions.
"We aren't through it yet," the report says.
"March saw another strong flow of listings coming onto the [housing] market."
"The total amount of stock on the market lifted another 0.6% in March (seasonally adjusted) and is at the highest level in 10 years."
"Total housing stock in Auckland, which is currently at the highest level going back to 2011, lifted another 1.2%, as new listings outpaced house sales growth of 1.0% in the region (seasonally adjusted)," ANZ says.
"It's not surprising that sellers have become more realistic with their asking prices in this environment," the report concludes.
5 Comments
Although I have recently purchased I don't see this happening. Sentiment is all wrong for a start - but the spread sheet missed that measure.
A flood of returnees and ugly overseas events could do it though.
Sentiment is all wrong for a start - but the spread sheet missed that measure.
I hear you. I don't dissect the Ponzi but keep telling my clients that there is a strong relationship between positive / negative sentiment and price sensitivity in FMCG. You don't need a deep quantitative analysis to understand than when sentiment is low, price sensitivity can be higher. Case in point: Westgold butter been doing well in Asia markets, but currently having to discount up to 30% to meet sales targets. This is not incremental sales. It's base sales.
Prices have been rising for months.
ANZ always late to the party! 🥂
In other words, we're predicting a price increase because we have to, but deep down we don't think it will happen due to high stock numbers and economic uncertainty
Auckland still poor value for your money compared to almost all other parts of NZ
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