Another major bank lowers house price expectations
The first half of the year has been sluggish for the property market, with prices moving about half-a-percent, according to Cotality.
ANZ revised its forecast down in May, and now BNZ says it, too, has lowered its expectations.
Its chief economist Mike Jones said it now expected house prices would lift 2% to 4% over the calendar year, instead of the 5% to 7% it forecast previously. That would mean that prices would end the year about where they were in mid-2020.
"We haven't changed any of our interest rate views. The Official Cash Rate and short-term mortgage rates are expected to fall a little further. We nevertheless still see the value in the mortgage fixing decision as tilted more toward longer fixed terms."
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Lower mortgage rates were creating activity in the housing market, but the recovery was "creaky and tentative," he said.
Jones said while 15% more houses were selling than the same time last year, about in line with the long-term average, there was still a large number of homes available for sale. That meant buyers had a lot of choice and did not have to bid up prices to secure a property.
"Unsold inventory remains around 10-year highs. Buyers have both more time and more choice. Recent local council property (de)valuations in Wellington and now Auckland just reinforce this tilt in the balance of market power."
He said the excess inventory could take longer to work through than some people expected because of a "demand sag" in the middle of the year. The labour market was also weak and migration soft.
Jones said he expected prices to lift 5% next year.
rnz.co.nz
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