"We don't see any good reasons why the housing market might suddenly turn a corner over the coming months," economists say
New Zealand house prices are expected to keep slipping by just over 1% a month until some time next year, according to New Zealand's biggest residential mortgage lender.
In ANZ’s latest NZ Property Focus report, the bank’s economists said the housing market continues to evolve in line with their forecast for a 15% peak-to-trough decline in prices.
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“From a fundamentals perspective, we don’t see any good reasons why the housing market might suddenly turn a corner over the coming months,” the ANZ report said. “Mortgage rates are still lifting, housing scarcity has been greatly eroded, and affordability remains dire (albeit a little better). Importantly, if the market does put out any green shoots while the labour market remains too tight and CPI inflation too high, the OCR (and mortgage rates) will very likely need to go higher than otherwise, and for households with a high debt-to-income ratio, that would be particularly bad news.”
The report predicted housing prices to keep dropping by a little more than 1% a month for the remainder of this year “before gradually finding a floor over the first half of 2023.”
ANZ economists also reconfirmed its earlier forecast for a peak OCR of 4.75% by the mid-2023.
Read next: ANZ increases forecast of house price fall
“If we are right, it is likely that many shorter-term fixed rates will start to push above 6%, which is clearly higher than where they are now,” the report said.
