Treasury expects the average cost of a New Zealand home to dip 5% by June next year
In a pre-election economic and fiscal update, Treasury predicted that house prices would fall by June next year – but home buyers and experts are having none of it.
The Treasury expects the average cost of a New Zealand home to drop by 5% by June next year before rebounding as economic confidence recovers. However, home buyers, economists, and real estate agents shrugged off the forecast.
“I've seen little two-bedroom cottages with south-facing living rooms going for over $800,000, so it feels pretty crazy. There are tons of people out there with babies on their front-packs, and with their Mums and Dads, so it's definitely a pretty saturated first home buyer market, I think,” said Grace, a first-home buyer, as reported by RNZ.
“One you're in this realm of spending, 5% ... it ends up not making much difference, I would think, especially when it's so cheap to borrow money. I don't know if I would like, wait around to see if that happens, or not.”
Read more: Westpac economists expect house prices to continue rising
The Real Estate Institute of New Zealand (REINZ) recently revealed that it had seen its busiest August for sales volumes in five years, with record house prices seen across half of New Zealand.
Bindi Norwell, the chief executive officer of REINZ, said Treasury's forecast came with a get-out clause.
“We've seen price growth for I think 107 months in a row, which has really put pressure on affordability. So if you're looking at 5%, I think that's not a significant amount. But they did caveat, the Treasury, by saying that if the continued resilience and current sentiment continues, they will revise those forecasts as well,” she told RNZ.
ASB chief economist Nick Tuffley added: “We're a bit mindful that unemployment is likely to rise as we're heading through into next year, and that could take the edge off it. But having said that, we think the market's going to hold up and be quite resilient, and it could be quite possible that we don't see a dip.”
