Coronavirus could slow down house price growth – economist

The spread of coronavirus around the world has already affected people’s health and businesses – and now, Westpac’s chief economist has warned that the outbreak could also slow down the country’s “rampant” housing market.

Dominick Stephens, chief economist at Westpac, said house prices in New Zealand could “slow down sharply” as the outbreak continues to affect the economy – hitting consumer confidence. The slow house price growth could also impact consumer spending and the country’s GDP.

Read more: Economist warns about the effect of coronavirus on housing market

However, Westpac economists still expected the market to pick up later in the year due to lower mortgage rates. They also predicted that the Reserve Bank of New Zealand (RBNZ) would cut 25 basis points on March 25, with a further 25 basis point drop in May.

“Markets have been questioning whether the RBNZ would cut the official cash rate (OCR) at an emergency meeting before the official announcement on March 25 or it would cut 50bps on that date. We don’t regard either scenario as likely,” the Westpac economists explained, as reported by GoodReturns.

“The central bank’s take on the coronavirus has sounded distinctly more moderate than other central banks … Our interpretation is that the RBNZ is thinking hard about the coronavirus outbreak but has considered monetary easing as not the most important resolution.”