BENGALURU- New Zealand’s house prices are forecast to fall more than previously thought this year and next with a peak-to-trough slump of 18 percent as aggressive interest rate hikes weaken an already-slowing housing market, a Reuters poll found.
Average house prices in the country rose by more than 40 percent at the height of the pandemic before reaching a peak in November last year at levels the Reserve Bank of New Zealand (RBNZ) said were unsustainable.
As the RBNZ has aggressively hiked the cash rate, and mortgage rates have followed suit, prices have retreated sharply, but not enough to solve the affordability crisis that has left many potential homebuyers renting.
Average home prices were expected to decline by 11.5 percent this year and 6.0 percent in 2023, a Nov. 9-23 Reuters survey of 12 property analysts found.
Those estimates showed a slightly deeper decline than the 10.0 percent and 5.0 percent fall predicted in a September poll.
Still, that fall would be tiny compared to the 250 percent rise in New Zealand house prices since 1998, almost four times the average increase across OECD countries. House prices have nearly doubled in the last seven years alone.
“The fall has been very orderly so far,” said Sharon Zollner, chief economist at ANZ. “Even a 20 percent fall could be considered a soft landing. A hard landing would likely require an employment shock and forced sales, and we are not seeing any evidence to suggest this is happening en masse.”
