Source: Radio New Zealand
House prices might not rise this year after all, property data firm Cotality says. RNZ / Quin Tauetau
House prices might not rise this year after all, property data firm Cotality says.
It has released its latest data, which shows property values lifted 0.2 percent in March, after the same rise in February.
The median value in March was $802,599, 1.3 percent lower than a year earlier and just over 17 percent down on early 2022.
In the month, both Hamilton and Wellington were down 0.1 percent while Auckland and Tauranga were flat. Auckland’s affordability had improved in recent years as more supply had come on to the market, prices had dropped and incomes had increased.
Christchurch was up 0.6 percent and Dunedin 0.7 percent. Cotality said areas that were benefiting from a positive agricultural sector were seeing stronger growth.
Wellington remained one of the weaker parts of the country, with all of its regions down over the past 12 months and all still more than 20 percent below their peak.
Chief property economist Kelvin Davidson said two months of increases in a row could signal a change in direction for the housing market, but the Iran conflict threw a layer of uncertainty over everything.
He said he had been expecting prices to rise 5 percent this year but that was not as likely any more.
“The chances that things are even weaker get greater and greater the longer this goes on.
“At the moment you’d certainly have to be pegging that back a bit. I see some of the banks are now talking about possibly small falls in average house prices this year and that wouldn’t necessarily surprise me either … we had a relatively modest house price forecast up to 5 percent – you could easily imagine that being down at zero or even slightly negative. That’s despite the fact that mortgage rates are relatively low at the moment.”
Cotality chief property economist Kelvin Davidson. SUPPLIED
He said the factor that was missing for house prices to turn around was confidence.
“There were signs that was starting to come through but now that’s hard to imagine. Your confidence would probably be going the other way, potentially the economy’s going the other way too and potentially mortgage rates are going up. All of those things that might have been falling into place for the housing market are now starting to go back in the other direction again.”
He said while some sellers might not be pleased, it was still good news for buyers provided they felt secure in their jobs.
“In a nutshell, both the economy and housing market still face a testing period ahead.”
Davidson said he did not expect “knee jerk” official cash rate rises but the Reserve Bank was on high alert.
“Global uncertainty stemming from the Iran conflict and concerns about wider inflationary pressure have already seen interest rates rise in world money markets, and that’s flowed through to mortgage rate lifts at some NZ banks.
“Many households will be watching that very closely and recent data shows there’s recently been a strong shift by borrowers towards fixing longer.
“That will give some sense of security to individuals, but for the wider housing market the risks of higher inflation, rising interest rates, and/or a softening economy both point to headwinds,” Davidson said.
“Indeed, our modelled forecast for property sales to rise from around 90,000 last year to 100,000 this year is starting to look a stretch. In the end, though, everything is a watching brief at the moment when it comes to the economy and housing market.”
He said households might not want to list their homes for sale in an uncertain environment.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
