ANZ New Zealand's economists are still expecting the Reserve Bank (RBNZ) to hike the Official Cash Rate (OCR) three times this year, even as concerns over oil supplies ease.
In their latest Property Focus report, ANZ's economists note that following a Memorandum of Understanding between the US and Iran, oil prices have declined almost as quickly and as far as they increased at the start of that conflict.
"The speed and extent of this correction has taken us and the RBNZ by surprise," the report says.
So does the fall in oil prices mean that OCR hikes can now be called off?
"We don't think so," the report says.
"After all, the RBNZ was already forecasting three hikes before the oil price spike occurred," it says.
"On balance, we still expect the RBNZ to hike the OCR by 25 basis points in July, September and October, taking the OCR back to 3% [from 2.25%], the RBNZ's current best estimate of neutral," the report says.
And even if the current break in hostilities between the US and Iran holds, ANZ's economists are still picking an overall decline in house prices this year.
"Our forecasts have house prices drifting 2% lower this year, continuing the theme of going nowhere fast after the Covid era boom and bust," the report says.
The report says the forecast of outright falls in house prices this year was based on rising mortgage interest rates, uncertainty around taxation of housing leading up to the General Election and weaker economic growth due to the oil price shock.
"The first two of these factors are still very much in play, but if oil prices do stay down, there's room for the economy and housing market to outperform our expectations in the coming months, and house prices have stayed flat over the first five months of the year.
"All up, the risks around our house price forecast are shifting to the upside.
"Still, headwinds look likely to keep the market and prices relatively subdued this year," the report concluded.
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