ANZ Economists Predict House Prices to Stabilize with Only 2% Further Decline
ANZ economists have released their latest Property Focus report stating that house prices are likely to only fall 18% from their November 2021 peak.
This news follows the Reserve Bank’s proposal to ease loan-to-value restrictions, combined with stronger recent housing market data, and some falls in fixed mortgage rates.
Previously, ANZ economists expected a 22% decline. As prices are already down 16%, there is only another 2% to go.
The economists mentioned that auction clearance rates in Auckland suggest that downward price momentum in that market might have already turned a corner. They also stated that migration has surged in recent months, which could increase demand for housing.
“Clearance rates and prices tend to move together, as a tighter market will typically see more properties sold under the hammer than by negotiation,” the economists said.
The ANZ economists said downside risks had not “suddenly vanished” and that the “animal spirits" in the housing market could get very wild and were very difficult to capture in a consistent way in modelling.
“As the eventual floor in housing approaches, we are becoming wary that there’s a potential cohort of would-be buyers out there, waiting to get in at the low point,” they said.
However, they also warned that if the housing market proved more resilient, the Reserve Bank might think it was not getting the traction it needed and push the official cash rate higher.
The ANZ economists said that the Reserve Bank had the tools to tame this beast if needed, no matter how wild it gets.