ANZ New Zealand's economists are expecting a 2% fall in house prices this year.
In the latest ANZ NZ Property Focus report, they note a "nascent recovery" in the economy, but warn it's now facing "extreme uncertainty" due to the Middle East war and the flow on economic impacts.
"Challenges for the housing market come in the form of confidence about the economic outlook (read: job security) and upward pressure on mortgage rates," the report says.
"The increase in wholesale swap rates has been sharp and has already started to feed into higher mortgage rates even as the Reserve Bank has said it is happy to wait and see how things play out for now," it says.
"Much depends on how long the conflict in the Middle East restricts global oil supply, but given these new headwinds in the housing market, we now expect a 2% fall in house prices over 2026," the report says.
That's a complete reversal of their previous forecast of a 2% increase in house prices this year.
ANZ NZ is the country's biggest mortgage lender with total loan exposure of $115 billion as of December 31 last year.
The report also notes house prices have already been flat for some time.
"House prices continue to go nowhere fast," it says.
"While the seasonally adjusted Real Estate Institute of New Zealand House Price Index lifted 0.6% month-on-month in February, it's part of an extremely patchy run - prices have been flat or falling for eight of the last 10 months."
"But nothing else in the market suggests we'll see rising prices from here - there are plenty of new listings compared to sales, the length of time it is taking to sell a house has been rising and fewer homes are selling at auction," the report says.
On the mortgage rate front, the report says there is risk of further increases, with recent rises in fixed rates driven by sharp increases in wholesale rates.
"As unwelcome as the rise in some some fixed mortgage rates will be to readers, those rises have been much tamer than rises seen in wholesale rates," the report says.
"Unless we see a sustained de-escalation in the [Middle East] conflict, given how far wholesale rates have risen, the risk is that mortgage rates may rise further over coming weeks," the report warns.
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24 Comments
But but...they aren't making anymore. Actually they are, all over the place.
I see your 1% and raise to 2%......
turtle
turtle
turtle
.........
Bound to be -10% by years end.....
Nationwide or in Auckland/Wellington?
Well there's a surprise.... not. The recovery has been delayed by atleast a year thanks to this oil shock. The question is, which way will the OCR move next? Will it go above 5%, or will there be a massive global recession prompting reserve banks to begin quantative easing again?
Don't confuse an inflationary recession with a deflationary recession.
OK, I may be getting ahead of myself here, but if the world economy tanks (a distinct possibility), inflation will eventually be snuffed out - right? Assuming an accelerated switch to renewable energy/transport, the cost of heating our homes and transporting goods will decline, which will should be deflationary - right?
Clutching at straws here hamishk. The only recession I see in the next 12-24 months is from stagflation.
"Assuming an accelerated switch to renewable energy/transport" What is that saying about assumptions?
How much straw are you going through, I have a hay barn may be able to supply
The heavens have opened!
So, yesterday Westpac said down 1% this year.
Today, ANZ says down 2%.
Which bank tomorrow for down 3%, anyone ... ?
Aotearoa needs betting markets (Polymarket and Kalshi are illegal gambling operators under existing gambling laws).
That would give the DGMs an opportunity to put their money where their mouths are relative to our technically gifted bank economists.
Can work the other way as well. Bets that the Ponzi is at par or even ends up in the black.
Don't even need that. Sold my house in Feb 2022 for 2.1M, been renting since April 2022. Today I could buy it back for 1.6M and in the meantime I spent around 200k in rent. I'm still better off by 300k plus council rates, plus maintenance plus insurance. So realistically 350k better.
Easier to push buttons don't you think? F'more, the odds might change over the calendar year. Even better if the betting markets allow leveraged bets.
I've learnt that the easy way is rarely the most rewarding.
Placed my bet when I sold up a few years ago to rent and ride the stock market
No surprises here on how a -2% forecast in a flat market turns into -10% in the comments within about 30 minutes.
The report basically says prices going nowhere in which is what they’ve been doing for most of the past year.
However somehow “sideways” keeps getting translated into something a lot more dramatic
Consider the positive spin the banks were pushing all the way through since prices even started on the declined 2022. This is the 1st time they have openly stated that things will drop. If they can pump crappy predictions out through a downturn for years, what then does it infer if they predict some downturn finally? Is it simply they have come to reality and read the room? I'd consider given their access to data the would have been able to do this from 2022....but they didn't.
Th other option being that they need to set expectations to influence borrowing decisions lest they have egg on their face again, stating things will stagnate or grow when all data points to the obvious.
They are out of hay, have no straws left and, having been to the therapy of reality, now admit, we are doomed?
They have been trying to prop the market up to keep lending, while also extending and pretending with mortgages in arrears.
They now have to temper any panic and set expectations accordingly to best prevent a big sell off that would harm their future lending volumes and profits, (cough cough) I mean national residential property prices.
Yeh maybe, but even with that, it still feels like a pretty big jump from -2% to -10% that quickly.
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