ANZ's economists are expecting only modest house price growth over the next couple of years.
"We remain of the view that house prices will gradually strengthen," they say in their latest Property Focus report.
"Central to this is our expectation that the RBNZ will end up reducing the OCR more than the Monetary Policy Committee currently expects, which will support house prices, through both lower mortgage rates and a cyclical economic recovery," the report says.
"We are forecasting a 25bp cut not only in August but also in November and a final cut in February to take the OCR to 2.5%, though we are describing that one as 'pencilled in' and contingent on how global factors affect the domestic economy," it says.
However the report also stresses the modest nature of future price increases.
"Our baseline forecast for 2026 is that house price inflation won't race away," it says.
"The sorts of changes in interest rates that really move the housing market are those that are expected to last for a long time and consequently get priced into longer term interest rates - this was an important factor behind the housing market upturns in 2014-2016 and 2018-2021.
"This time around, the drop in longer term interest rates has been more muted, with rates such as the five year mortgage rate dropping only around half as much from their late-2023 peak as short term interest rates have.
"In part, this is because longer term interest rates are heavily influenced by global long term rates, and these haven't fallen as much as New Zealand's OCR.
This is making the current interest rate easing cycle less potent for the housing upturn that other recent easing cycles," the report says.
The report also point to other factors that will help moderate rising house prices.
"Other factors will also constrain how rapidly house prices can increase, including ongoing affordability constraints and debt-to-income limits capping the upside to borrowing capacity," it says.
"However, a lower OCR and cyclical economic recovery are likely to see prices increase modestly over the next couple of years," the report concludes.
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13 Comments
Why do we give these bank economists air time? Mike Jones is the worst. He spends all his time on property podcasts and is clearly a biased property investor. Wild predictions this year about 7%+ growth in the resi property. Its just cringe worthy vomit.
Why do we give these bank economists air time?
Because something needs to capture eyeballs and housing seems to be the most triggering aspect of the economy.
These Bank Economist scrotes, are just saying what their own fat bankers bonus need to happen, to have these bonuses materalise - Bigger bank lending, lassoing up the hapless FHBs and other highly indebted borrowers, with Debt loading for their entire lives.
We say we stopped slavery a hundred/two hundred plus years ago.....but really this is now become slavery equality "everyone can be a slave" to the Banks and DDDeadly DDDDebts.
This it it exactly. Our society has 'normalised' being in debt slavery to a mortgage for practically all of our working lives. This narrative obviously works well for the banks, and they're keen that the story doesn't change any time soon (if ever).
Want a bigger / better / newer / sparklier car? Just put it on the mortgage. Want an overseas trip? Just put it on the mortgage. Want to replace a perfectly functional kitchen / bathroom with a newer, shinier kitchen / bathroom? Just put it on the ortgage...... sucker.
Our society has 'normalised' being in debt slavery to a mortgage for practically all of our working lives.
Our society's only common understanding is surrounding money. As opposed to days gone by when it'd either be the group identity, or the belief system of a larger population.
Almost everything offered in modern civilisation has a price tag. Your birth, your education, your healthcare, food, water, retirement, you name it. In such a system, freedom is fairly elusive for most.
Although, who'd expect to arrive on earth and expect everything to come free.
Many have learned the hard way that positive vibes don’t pay the mortgage when the value keeps dropping.
I'd be surprised if house prices grow more than the rate of inflation in the next two years.
I'd be surprised if house prices grow more than the rate of inflation in the next two years.
Given that you have no idea what the real rate of inflation is (no, it's not the CPI), that's not really adding any insight. Given that the CPI is designed to be benign at best and deceptive at worst (meaning that price inflation is suppressed as much as possible), it doesn't really tell us much in relation to the Ponzi. You'd be better off looking at the relationship with credit growth and the attenuator (interest rates) as well as a quantified measure of marginal buyer behavior.
Could view it as a house/gold ratio or vice versa. How many oz of gold does it take to buy a house (but people will argue gold is speculative etc...not representative...all though over the long term it does swing to and fro but eventually gives a good trend of whether houses are trading above or below their intrinsic value).
Only if you believe gold is an accurate proxy to measure the effects of monetary inflation. While I do to some extent, I also believe in the conspiracy that the gold price has been suppressed. So what does that actually mean for gold as a barometer? While 'how many ozs of gold does it take to buy a representative unit of housing over time' makes much sense to me, my reckon is that if the gold price has been suppressed to any great extent, then the measure is 'understated' - by that, we could assume that monetary debasement is far worse than what it already is.
The SPY measured gold is interesting to me. It suggests that the only real driver in the value of the productive economy (as captured by SPY) is expansion of the money supply.
Not sure where the money will come form to do that. Wages are falling behind inflation and inflation looks set to continue.
That's the balancing act that the ruling elite must grapple with: ensuring that income growth is similar to that of the CPI. But that in itself lies the fraud.
Using Aussie as an example, since 1975 the average home price in Australia’s capital cities has risen by 3,435%, while median full-time wages have increased by only 1,183%.
Over the same time period, the CPI has grown 779%. Now, naturally, the ruling elite will tell you that income growth has surpassed CPI growth. But in reality, when the numbers are massaged to the extent they are, you are welcome to be skeptical.
In other words:
2025 -2.0%
2026 +2.0%
2027+1.0%
= +1% over the next 3 years
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