House prices soared near the end of 2020
House prices soared near the end of 2020, with November marking the third record-breaking month in a row – and experts expect house prices to continue to rise over the next few months.
Quotable Value (QV) general manager David Nagel predicts that property prices will continue to rise this year due to various factors, although at a considerably slower rate than what the market currently sees.
“A shortage of listings, record-low interest rates, and the looming re-introduction of loan-to-value (LVR) ratios mean that the property market is in for a hectic summer. But when the LVRs do eventually kick back in just as the weather begins to cool in March, I expect the property market will start to cool as well,” Nagel said.
“I’m predicting we’ll see something more akin to 2019 levels of growth again when prices increased by an average of 4% to 5% nationally, as opposed to the rampant double-figure growth that we’ve witnessed during the back half of this year.”
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Economists at ASB, BNZ, and Westpac aired the same thoughts, with ASB senior economist Mike Jones and BNZ head of research Stephen Toplis forecasting double-digit growth by the end of 2021. Westpac chief economist Dominick Stephens also said they expect a peak of 16% annual house price inflation in June and a 12.2% full-year increase over 2021.
“House prices are being driven higher by low-interest rates, and interest rates are set to stay low or fall further over the coming year. Meanwhile, other factors such as net migration and the economy are going to improve. So our models point to ongoing rapid house price increases,” Stephens said, as reported by NZ Herald.
Meanwhile, Kiwibank chief economist Jarod Kerr said they only expect 5% to 6% growth this year when LVR restrictions return.
