ANZ's economists expect house prices to rise slightly in the second half of this year.
"We are forecasting house prices to lift just over 3% across the second half of the year," their latest Property Focus report says.
"While there are still plenty of headwinds facing the housing market, we expect the tailwinds will blow a little more strongly across the second half of the year."
The tailwinds adding momentum to the market include:
- The rapid surge in net migration
- An easing in new housing supply contributing to a widening housing deficit
- The resilient labour market
Conversely, the report lists the following factors still dragging on the market:
- Relatively high mortgage rates hampering borrowing capacity
- Still stretched affordability levels
- The outlook for a weakening labour market, although this may not yet be obvious to many people
The report says ANZ's economists are still expecting the Reserve Bank to hike interest rates again in November, but also acknowledges the possibility of an interest rate cut depending on how the economy performs.
"While high mortgage rates are certainly suppressing demand by sucking money out of debtors' pockets, household incomes have also grown strongly because of the tight labour market," the report says.
"While we do expect to see the labour market loosen over the second half of the year and lower wage growth as a result, we recently revised our forecasts to incorporate a slower rise in the unemployment rate than previously.
"We now see the unemployment rate rising to 4.2% by the end of the year, rather than 4.4%," the report said.
ANZ is New Zealand's biggest housing lender.
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