They expect the OCR to hold at 0.25% this month
The Treasury predicts that house prices will fall by June next year. However, many economists and experts have chosen to ignore the forecast, with some predicting that the median property price in Auckland would reach $1 million as early as the end of 2020.
The latest Finder RBNZ Official Cash Rate Survey, which interviewed 13 economists and experts, expect a 6% increase in house prices in Auckland, Wellington, and Dunedin and a 5% spike in Christchurch by the end of the year.
Therefore, Auckland's average median house price is expected surpass the million-dollar mark – rising from $950,000 to $1,007,000 despite recently enduring another lockdown.
“Homeowners were bracing for significant price dips at the start of the pandemic, but this hasn't happened as of yet. While this is good news for homeowners – particularly in an era of low mortgage interest rates – the opposite can be said for those hoping to get a foothold in the market,” said Kevin McHugh, Finder's publisher in New Zealand.
Read more: Experts, home buyers slam forecast of falling house prices
All respondents expect the official cash rate (OCR) to hold at 0.25% in September, while 69% expect a cut next year. Of this group, 31% predict that the Reserve Bank of New Zealand (RBNZ) would cut the OCR in the first quarter of 2021.
“The housing market is being strongly stimulated by low-interest rates. Should the economic fallout of the cessation of government subsidies be less than expected, the RBNZ will likely move to arrest the burgeoning house price inflation,” said Bindi Norwell, the chief executive of the Real Estate Institute of New Zealand (REINZ).
Debbie Roberts, the chief executive officer of Property Apprentice, added: “I wouldn't be surprised if the Reserve Bank decreases the OCR on the one hand, and re-imposes restrictions on deposit requirements (for property purchases) on the other, to ensure that it doesn't add further fuel to the booming property market while trying to boost the economy.”
