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ANZ economists now say the downturn in the housing market will come later - at the end of this year and into next

ANZ economists now say the downturn in the housing market will come later - at the end of this year and into next

Economists at the country's largest bank say the fiscal support measures for the economy are doing the trick and they now see the downturn in the housing market coming later and being somewhat less severe than they earlier forecast.

Two months ago the ANZ economists were predicting house price falls of 10% to 15%, but with a risk they could fall by even more.

However, in the ANZ's latest Property Focus publication, chief economist Sharon Zollner, senior economist Liz Kendall and strategist David Croy said they now see house prices falling by 5-10%.

Additionally, this fall is now expected to occur a little later, with the brunt of the impact occurring at the end of this year and into next, once the labour market situation becomes clearer.

"This is a smaller fall than we previously feared, with a less aggressive subsequent rebound," they say.

"We aren’t ruling out a larger fall; there are clearly significant downside risks. But we are now more comfortable that stimulus is providing support, and a bigger drop may be avoidable."  

The economists say their central view is still trends in the housing market have dramatically changed, and that this will weigh on prices.

"But we now assume more of an offsetting impact from policy supports. Temporary boosts to cash flow like the wage subsidy and mortgage deferment schemes will end, but house prices tend to be quite persistent, so this boost will linger. Meanwhile, low (and potentially even lower) interest rates will be with us for a while yet, especially given our expectation that QE [Quantitative Easing - money printing] will increase to $90bn at the August [Reserve Bank Monetary Policy Statement]."

At the moment the RBNZ's Large Scale Asset Purchase (LSAP) programme, or QE, is set at $60 billion.

The ANZ economists say if the housing market drops by more than they currently expect they think the RBNZ will "pull out all stops to shore up the outlook".

"In fact, we cannot rule out the RBNZ deploying a negative OCR [Official Cash Rate] if the outlook was deemed bad enough and the associated risks worth taking."

At the moment the OCR is at 0.25% and when dropping it to that level from 1.25% in March the RBNZ indicated it would leave it unchanged at that level for 12 months. At the time it ruled out using negative interest rates because some bank systems simply were not prepared for this, but subsequently the central bank has refused to rule out taking the OCR negative at some point and it has asked all banks to have their systems able by the end of this calendar to handle negative rates.

"A negative OCR could unhelpfully impair credit supply," the ANZ economists say.

"However, such a tightening would potentially be concentrated in riskier sectors, like business and commercial property lending. This could be bad for investment but not necessarily such a headwind for the residential property market.

"A negative OCR would lower mortgage rates and boost asset prices, which would likely lead to net positive impacts on the housing market if deployed, providing eventual support in the event of a sharper correction. " 

The economists say their expectation that we may see a smaller house price fall than previously assumed will mean consumption may be slightly stronger than otherwise, but still weak.

"House prices affect household spending through impacts on net worth, confidence, and durables purchases associated with house sales. Spending is expected to be tempered by these effects in the period ahead.

"More striking is the impact that a weaker housing market could have on new home building and renovations, both of which tend to be spurred by developments in the existing property market. New home building is expected to drop – potentially quite sharply – from its recent highs.

"The extent of this impact is highly uncertain, depending on how housing market and other domestic economic developments evolve, and the degree to which new home building by the Government takes up some of the slack.

"Reflecting this weak outlook, confidence and profitability expectations amongst builders are very poor. For these firms, and those in the retail sector, the outlook for the housing market will have a significant bearing on profitability.

"And with housing a bellwether of the domestic cycle, other industries will not be immune should the housing market take a significant hit. We continue to expect that GDP will contract 7-9% this year.

"However, the outlook remains highly uncertain, and a better house price outlook tempers some of the downside risk we see around this forecast."  


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Just as the COVID19 is all over in early to mid 2021, NZ's property price will soar again and even more violently than it did between 2012 to 2019.


Don't count on it just yet, there is a fair bit of frictions between the (far) East and the West at the moment. Unless some old maps turned up and NZ is a now part of the network of islands.

did you not read article by Chris Nixon here talking about where and with whom NZ's economic future would be?

Most of the west is now trying to distance from the small part of the west (The US especially).


Oh damn it, what have I missed?
I only read that UK is kicking up dirt, France is doing the same, Australia is now joining the trends. Japan is relocating their manufacturing plants elsewhere. The only country that has been a bit luke warm is Germany! Don't forget India..


Xingmowang is in denial!
He can't face the reality that soon it will only be poor countries and despots that support the CCP.
The CCP only has itself to blame - its IP theft, its human rights abuse, HK, cheekiness in the South China Sea and its arrogant belligerence in general.
If the wealthy nations of the world isolate it, China will struggle to achieve its ambitious development aims.
China needs the world more than the world needs China. Yet, the CCP doesn't seem to understand that.

Sadly you are the one who seems to be in denial.
You are describing how things SHOULD be ( no disagreement there BTW) - but not how the will be.

How do we measure this in NZ? Is it average price? Where do I look?


90 Bn in QE! That's tax folks, albeit in a different form (hard to understand so the politicians love it).
Savers and non asset owners about to get punished by boomer priorities once again.

Not just boomers, GenX are all in their 40s+ now and a fair few of the older Gen Ys are now property owners, most of Gen Z and the younger Gen Y are indeed a bit screwed.

Not just Boomers, but definitively 'Boomer priorities'.

Andrew Falloon is a millennial.

The lower the interest rates go the more bullish I am on Auckland property. This downturn may be the last opportunity to purchase affordable property in Auckland for a while. Can't see a crash happening in Auckland unless we saw a significant rise in interest rates and/or we have double digit unemployment combined with higher rates, a credit crisis and an over supply. There are risks there for this happening but it doesn't look to be on the cards just yet.




"Mortgage payments are considered affordable when they take up no more than 40% of take home pay.
On that basis it would be affordable for a young couple earning the median pay rate to buy a lower quartile-priced home in Auckland".

Sure, now do the deposit - go through all the assumptions in those reports underlying the deposit.

It's good comedy.

If by 'affordable' you mean 'severely unaffordable' but not 'you cannot be SERIOUS' then I agree.
It's actually quite nice to be out of contention and to just watch the wheels go around.

Affordable = most expensive property in the world relative to income ¯\_(ツ)_/¯

Love the figure at the end of your comment.


"The ANZ economists say if the housing market drops by more than they currently expect they think the RBNZ will "pull out all stops to shore up the outlook"."

Must do everything to keep house prices higher... must do everything to keep house prices higher...


Moral hazard, anyone?

Immoral Central Bank


It's telling, isn't it. High house prices have become so dangerously high and crucial that they can't let them drop much at all, or the whole FIRE economy will be in real trouble.

Agree, now reserve bank and government have no choice but to do anything g and everything to support and promote the housing bubble as it is at a height that slight push and is all over.

Can they And for how long can they manipulate the functioning of economy which has to ultimately based on fundamental and not printing and distribution of free money.


It would be pretty sad if the central bank and government both used their credit-creation fire power to prop up a housing bubble. House prices are already so high that wealth divides are turning into chasms, young people are putting off having children, and the productive economy is being starved. I guess it's happening all over the world though, and we don't want to be the first domino to fall.

The first domino might get a bigger share of the young talent in the aftermath. Those kids love fallen dominoes.


What this vested interest article is not telling you is mortgage rates are declining as the banks are spilling over with money, as they struggle to find credit worthy borrowers to lend to. Plenty of people wanting more borrowings, but they and their security is too much of a risk.

Just imagine if the government regulated borrowing on houses to loans not more than 5 times that of the households gross income. Banks then wouldn't be able to manipulate the supply of money to generate unsustainable prices we now have.

Its too late for 5 times, but it may be a good time for the government to implement measures along the lines that banks can not expand their lending more than the annual growth of local wages. Might be more sensible and sustainable, rather than being exposed to these money manipulating fair weather sailors, don't you think?

I'd vote for a party that would make it there central election platform, and I'm not expecting this from major parties given their track record of encouraging unsustainable bank lending.
e There’s a trap in purchasing now, as even though the investment may be cashflow positive at present, I anticipate a reduction in rentals all round. For residential, I see a reduction here as more supply is coming on stream with projects already in train, and people being forced to bring in boarders and or having to more back home or in with other people until they find another job.

You are right on DTI. You may even call it prudent. But with a DTI you will need some additional measures to ensure that FHB and owner-occupiers who want to upgrade can compete with professional landlords. If you do not do that directly, you will need to regulate rent prices to ensure that houses are not attractive as an investment (otherwise, landlords will buy houses, cheaper than they otherwise could have, force rents higher as their rents are not limited by DTI, and make investing in properties even more attractive).
It is a very difficult balance to get right. You need encourage building houses, discourage land-lording, do not allow non landlords to go crazy on credit, maintain realistic prices for renting and build good quality houses at affordable prices with ever increasing input costs etc. It is very hard to achieve and the scope of it indicates that a comprehensive and integrated approach across so many different fields is required to even have a chance.


Stop professional landlords using unrealised 'equity' (i.e. Paper BS) as deposits.

Problem. Solved.

Under old LVR rules
A Landlord with 1 rental property at 60% LVR needs to see a property price increase of 40% to recycle equity and purchase another property
A Landlord with 10 rental properties at 60% LVR needs to see a property price increase of 4% to recycle equity and purchase another property
20 = 2%, 40 = 1% etc.

What ANZ nor any other bank can't predict is what happens when the realisation of this hits home and the untold damage that it will do to any market that thinks 'there is a cure just around the corner'.

” This virus is not a living organism. It is a protein molecule (RNA or DNA) covered by a protective layer of lipid (fat), which, when absorbed by the cells of the ocular (eyes), nasal (nose) or buccal mucosa (mouth), changes their genetic code (mutates) and converts into aggressor and multiplier cells.
* Since the virus is not a living organism, but is a protein molecule, it cannot be killed. It has to decay on its own. The disintegration time depends on the temperature, humidity and type of material where it lies.
* NO BACTERICIDE OR ANTIBIOTIC WILL WORK because the virus is not a living organism like bacteria; antibodies cannot kill what is not alive.”

BW I agree with you on uncertainty. It is as high as it has been in a very very long time. So any prediction of future is subject to a very low confidence. However, you then progress to argue that your understanding of the risk is better than anyone else in the market on something you cannot possibly know any more than any other average market participant (biological properties of the virus on how it may affect potential medical cures/preventions) . This virus is confusing all health experts on the planet earth. There is not a day goes by when you do not see new findings that dispute the findings of yesterday and either indicate a better tomorrow or something far worse.

* NO BACTERICIDE OR ANTIBIOTIC WILL WORK because the virus is not a living organism like bacteria; antibodies cannot kill what is not alive.”

Correct. But since, as it says earlier, it's just some protein surrounded by a protective layer of fat, soap and detergent are sufficient to destroy the virus molecule to a degree that it can't function. Soap and detergent are more readily available than "bactericides" or "antibiotics".

"antibodies cannot kill what is not alive.”

Technically true, but also irrelevant for the following reasons:

1. It is not the job of the antibody to 'kill' anything. Anybodies are like tracers that bind to whatever they can recognise on foreign molecules/substances. These can be living or 'dead'.
2. Antibodies then present the bound molecule/substance to other cells e.g. B and T lymphocytes, macrophages. It is the job of the latter to do the 'killing' - which is essentially breaking down the presented foreign molecule. Again, it is irrelevant whether this is a 'living' or 'dead' molecule.
3. Vaccines are very effective and operate on this principal (i.e. presentation of non-living molecular markers to the immune system to elicit immune system recognition [which is 'remembered'], such that re-presentation of said molecule on a living [or dead e.g. virus] organism allows immune system to swiftly deal with it).

Thanks for listening to my TED(ited for missing bracket) talk.

"We aren’t ruling out a larger fall; there are clearly significant downside risks. But we are now more comfortable that stimulus is providing support, and a bigger drop may be avoidable.
Meanwhile, low (and potentially even lower) interest rates will be with us for a while yet, especially given our expectation that QE [Quantitative Easing - money printing] will increase to $90bn at the August [Reserve Bank Monetary Policy Statement]."

The notion that elevated valuations are “justified” by low interest rates requires the assumption that future cash flows and growth rates are held constant. But any investor familiar with discounted cash flow valuation should recognize that if interest rates are lower because expected growth is also lower, the prospective return on the investment falls without any need for a valuation premium.Link

...the decline of interest rates to zero corresponds with a monetary imbalance in favor of deflation, if at least an abundance of deflationary pressures. This is something that Milton Friedman also talked about, particularly in 1998 with regard to Japan. He called it the interest rate fallacy, meaning that low nominal interest rates signify "tight" money conditions, or what would be consistent with significant deflationary pressure. It is and remains a fallacy because economists like those at every central bank around the world have decided instead that low rates are only "stimulus."

To correct this view, Friedman pointed out the basic, non-trivial distinction between a liquidity effect and an income effect. Low rates can be stimulative in the short run (the liquidity effect), but over the long run their persistence means something far different. A yield curve is supposed to be upward sloping given the core time value of money and investing. That arises from opportunity cost, meaning the more plentiful the opportunities the greater the time value and the steeper the curve (the income effect). Yield and/or money curves (the eurodollar curve and even the history of the OIS curve) that collapse and remain that way unambiguously demonstrate that "stimulus" deserves only the quotation marks.

Policies that continue to be categorized in that fashion while the interest rate fallacy remains are devoted to the economy that "ought to be", not the economy that is. The danger comes as Keynes warned, in repeating mistakes rather than learning from them. Link

spot on!


Optimistic nonsense .

One of the biggest drivers of house price increases has been inward migration .

Thats no longer such an issue .

Demand will fall in due course , along with prices of second-hand houses

"....fiscal support measures for the economy are doing the TRICK"
Not much more to be said.


It makes me sick to my stomach to read this. ANZ are probably bang on here, but they could have worded it in a different way matching what many of the commenters on this site hint at.

The RBNZ see the 'wealth effect' of sustained high property prices as of far greater importance to the recovery in NZ, than support to businesses and incomes of New Zealanders.


Yep. It confirms what I've been saying for quite some time.

House prices are intentionally kept far out of reach for most kiwis because of deliberate actions by the unelected and unaccountable crooks at the reserve bank.

We don't have a functioning housing market. Prices are never ever permitted to drop and are engineered to perpetually rise.

Our economy has been hollowed out and our younger generations have been enslaved by their criminal mismanagement.

Attended some Open Homes which were listed for Auction this week, all agents contacting for "feedback" & most are certain that it will be passed in as FHB r the only buyers atm & they won't attend auctions.

i don't believe the conspiracy that the banks are pushing the RBNZ to lower rates. Banks make less money the lower the rates go. Maybe they are worried about the effect of defaults and negative equity on their balance sheets. . . .
If rates go negative, that's when it will get really miserable for the banks.

Not rightly sure if they have a choice, anymore. If rates are lowered, they make less money - if rates stay, people default on loans and banks make even less money..

re: negative rates, bail-in laws are already in place. Time to start hoarding cash perhaps?

First call: Panic, house prices will fall by 15% or more, the economy is going down.
Second call: housing may fall up to 10%
Next: there’s a possibility that housing may fall 5% but the RBNZ may ease and prop up.
Later: House prices on the rise again, regional economies booming, spending is up

If I recall correctly the first call was that house prices were going up 15%.

It turns out that chaotic systems are impossible to accurately predict very far into the future.


1 : ANZ economists now say the downturn in the housing market will come later - at the end of
this year and into next
2 : We aren’t ruling out a larger fall; there are clearly significant downside risks.
3 : The ANZ economists say if the housing market drops by more than they currently expect they
think the RBNZ will "pull out all stops to shore up the outlook".

So everyone agrees that house price will fall at the end of year (process should start after September) and No one knows the degree of fall and agree that large fall cannot be ruled out.

It confirms buying now something which will be cheaper in few months - So more the reason to hold buying now.

If so, should FHB not control their FOMO . Even if 5% fall for 800000 is 40000 and that should go a long way for FHB and this is best case scenario for housing market, assuming ANZ experts is correct and if it falls more will save near around $100000 and no FHB should miss out on this opportunity as waiting few months is no big deal after waiting for ages.

Biggest giveaway by ANZ economist is that they are expecting RBNZ to do anything and eveything, come what may, for the ponzi to continue. Their hope is based on life support from RBNZ as fundamentally all indicators points towards disaster.

You May be right.
But buyers are voting with their chequebooks and buying houses.
Never underestimate the instincts of the marketplace.

What’s a chequebook?

What's a chequebook? ;-)

If FHB or any buyer can save near around $50000 in worst scenario and more may be $1000000 as even today the most positive experts cannot deny and admits that market will fall.

Question is can first home buyers overcome FOMO specially with so much news/data being thrown at them on a daily basis by vested interest - RE is and has powerfull lobbyist.

The ANZ economists say if the housing market drops by more than they currently expect they think the RBNZ will "pull out all stops to shore up the outlook"

This statement and article remind me of Ceaușescu's speech in Revolutionary Square in December 21 1989. He spoke of the achievements and lauded the "Socialist revolution" and Romania's "multi-laterally developed Socialist society."

The debt mongers of ANZ are out in force now .. greedily selling their wares to unsuspecting FHB and greasing the chops of their model boomer children. It’s a con.

Do Zollner, Kendall and Croy even exist or are they just DebtBots

Time for the young generations to get angry and agitating against politicians and central banks deliberately inflating house prices, perhaps.


I'm already pretty angry, for one. I am highly qualified, had a minimal student loan (most of my education was paid for by scholarships) got a high paying job in my field (low six figures), realised I could not afford a house in the city I lived, arranged a move to the most affordable city in NZ where I can still do my job, and in the meantime before I could move, house prices there have shot up so much that if they go up anymore I will be priced out there too. At best I will have 30 years of scrimping to pay off a house I scrimped for a decade to be able to afford just so I can afford a frugal retirement in the regions. And it seems like the powers that be are doing everything they can to ensure things are as difficult for people in my position as they can be. To be honest it really, really pisses me off.

Well said. I think the only really good decades the West had for ordinary people were the 50s and 60s. Rot set in over the 70s (oil shocks, gold standard gone=money printing) and since the 80s the odds have steadily stacked against most of us.
I worked in NZ Govt in the 80s and 90s and inter-generational equity was a really hot topic among policy advisors. Fail.

Surely if you're single and on a decent wage you'd be able to save a deposit pretty quickly? Around 30-40k a year?

I'm in a similar boat. I arranged working remotely and moved to Melbourne for four years — at least I could keep one foot in the door of NZ and keep saving a deposit where the same rent money got me much better warm, light and airy apartment in the inner suburbs of a liveable city with solid public transport, wonderful bikeability, public spaces etc. I keep coming back to house hunt, attend auctions et al and can't believe my eyes (and sometimes, nose) at the quality and pricing of houses in NZ.

I have witnessed a sea change. The local DGM were until now positively gleeful in anticipation of housing carnage... but no more. The corona crisis will be over before we know it folks, both on a health scale and financial one. Vaccines are being produced on an industrial level now or in the near future and if successful that will free up economies to open borders. IMO

I see a comment above on DTI's.
"You are right on DTI. You may even call it prudent. But with a DTI you will need some additional measures to......."
DTI's and any other measures brought in prior to COVID to control the housing market is now out the window. Banks are now ordered to throw away all restrictions and just get on with "courageous lending", 90%, 100% LVR, whatever else, just keep pumping.

More lending equals more profit and reasonable profit is necessary to maintain jobs and the economy. I wish there were a way to control excess greed

Has your second sentence met your first? Excess greed fuels rampant credit growth and asset bubble. As with all pyramid schemes, for a time the profit is seen as win-win

I think that's why I referred to 'reasonable' profit as opposed to excess. It's a contrast. I am okay with reasonable but nz is so full of fly-by-night schisters even those in trades who make excess profits... because they can.

I'd be a little cautious on those vaccines. It's unlikely they will be effective. And when that reality becomes clear the crisis steps up a gear.

There are other coronaviruses that are/have been in circulation. SARS, MERS, the common cold. To date not a single successful vaccine has been marketed against any coronavirus. While some viruses can be controlled by vaccination, such as smallpox or polio, coronaviruses do not elicit the same long term immune response. While infection with chickenpox leads to lifelong immunity from re-infection, we can be re-infected with the same strain of cold coronavirus multiple times with no reduction in severity of symptoms in subsequent infections. Our immune system forgets coronaviruses. Recent research suggests that SARS-CoV-2, the COVID-causing coronavirus is forgotten within months.
That the current vaccine candidates show an immune response is not unexpected. For that response to be long-lived would be.

Thanks for passing on that knowledge. A bit disturbing...

Perhaps the solution isn't a vaccine, but healthy living. COVID19 rarely kills people under 40. Over 50s are often expected to have some sort of lifestyle disease. When it does kill the young, typically they're suffering from some lifestyle induced illness (obesity, high blood pressure, diabetes etc.). Often, very healthy young people don't even have any symptoms! In the under 25s, the flu is more deadly than COVID19.

Maybe this is a wakeup call for humanity to stop consuming calorie dense and nutritionally void foods and to start exercising our bodies. Less wheat, corn and sugar based food and more high quality meat and vegetables. Less sitting and desk work and more walking and running.

.. I should add - get some sun! The link between low vitamin D and serious covid infection is very interesting.

If this COVID doesn’t dent the property market I wonder what ever will...
Chances of 15% discount looks slim each day

This - absolutely.
I would love to pose this (rhetorical) question to the RBNZ myself.

Is there any scenario where they would allow any sustained drop in house prices?

If they could pull the strings perfectly with a 10 year plan, what would they do?

I think they have no clue. Prices must stay up!

Without structural changes to the way houses are financed (generational mortgages anyone?), is there any way house prices can continue to grow? At some point, the average mortgage will consume all of an average family income. Then what?

It's been supported by speculators, cashed up Chinese investors and stories of mass immigration and insufficient building. Covid has shut all that nonsense down. We have a few clueless FHB (lambs to the slaughter) and mum & pop speculators looking to spend cheap money. That's it now, the music is about to stop.

Time to consider your vote. If you want to see immigration focused, tax burden moved away from wages and into asset holders (debt farmers), then look at TOPs policy.

If you want your debt farm (properties) to benefit from high immigration and continued tax enslavement of young workers (aka the last 20 years), then vote Nats.

Absolutely agree. Vote TOP people.

it can be enlightening to keep records.
Each week, i record RE NZ listings info for comparison with prev same periods.
Here is data from July 21st 2019, with numbers from today in brackets:

Auckland total: 11,218 (10,673): - 4.8%
Auckland houses/townhouses: 5868 (5748) -2%
Rodney total: 2115 (1889) - 10.7%
NSC house/townhouse: 824 (789): - 4.2%
Auckland City house/townhouse: 854 (1035) +21.2%
Manukau City: 1411 (1311) -7%
Waitakere:805 (865) - 6.9%

Auckland apartments: 1871 (1877) Even
Auckland sections: 1942 (1602) - 17.5%

Hibiscus Coast total listing: 783 (658) - 16%

Clear winner is Auckland City.
Listings have also stabilised and started to fall in Auckland in last week.
Market has stabilised except for mania in Auckland City.
In about 3 weeks i think we will see sales lower than last July, as originally expected.
It is indeed likely (as i have said for 3m now) that prices will not decline until unemployment begins to bite and effect 2 earner household ability to pay mortgage and rent, especially. The differential impact on poorer households can already be seen in falling sales and listings in Manukau v that in Auckland City.
Another key metric which it would be nice to have RE NZ report on is listings older than 4 months.
I may do this shortly.

Great News !........ the banks can go on lending spree again....... let's all rush in before they change their mind and rack up some more debt not to mention its eventually all good debt ......something which we can all grow out of.

God forbid if anything like Covid comes in again, our darling Govt and Central Banks are happy to publicize the loss whist its only we who have taken this good debt can keep the profits to ourselves.