The reversal in house prices comes as the Reserve Bank pursues aggressive policy tightening to dampen demand and curb inflation. It delivered a fourth straight half-percentage point interest-rate hike -- taking the Official Cash Rate to 3% -- and signalling more rises to come. Despite the soft July month, some chief economists don’t yet see sufficient cause to change their forecasts for a 12% peak to trough decline in house prices, particularly given the recent dip in mortgage rates and tentative signs of an easing in credit conditions.”
Jeremy Couchman, senior economist at Kiwibank suggests that “House prices have further to fall in the current cycle as credit conditions remain tight and confidence is lacking,” He expects at least a 10% drop in 2022, and notes the price index at present has only returned to May 2021 levels.
Expectations that the Official Cash Rate will peak at 3.5% this year, compared with the 4% high the RBNZ forecast in May perhaps also underpinning the fact that house prices will not fall as far as once thought. Although Auckland is bearing the brunt of New Zealand’s real estate market contraction, with house prices falling 12% from their November 2021 peak.
In July, Auckland house prices fell 2.3% over the month, while Canterbury house prices fell just 0.6% - down a total of 3% from the November peak, according to the Real Estate of New Zealand’s latest house price index (HPI) report. “House prices are only back to where they were in June of last year and are still 30% above pre-COVID levels.”
Average days on market is climbing as many people are having to or wanting to sell to be able to buy – gone are the days of selling and then hoping that you would find a house.
We are seeing good sales at the moment between buyers wanting to buy and vendors who have made the decision to move. Remember if you are buying and selling in the same market then it is all relative.
Predictions from economists differ as you can see and it is difficult to know what to believe – but if you want to understand what this means to you – then give Victoria a call – she is the key to your next adventure.