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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11 Comments
3% inflation plus 2% drops..... compounding
The good news this is that this is only the beginning of a much needed 40% fall/ crash. The vested interests of banks, the real estate industry and vested interests economists whose bread and butter is based on convincing us to buy and sell cheap houses to one another at every more expensive prices are going to have to spin the faux positive NZ fairy tale for all it's worth. Grasping at any straws.!
From 0% to an actual drop, seems reality has finally has some weighting in their models
No economic growth forecast from them?
Finally, a selfishly vested, life sucking, debt peddling bank, telling a half truth!
So the Gecko, fully expects the year end 2026, with a good -5 to -10% REAL loss, in NZ property values.
See many transactions now back at 2018 to 2020 selling prices, in REAL terms. By 2028, many sales will be in the 2010 to 2015 price range.
The overloaded property hoarders have missed the best "once in a lifetime" exit window and will just need to accept the lower and lower offers of the future.
Perhaps we will never see the peak again, in our lifetimes. Just as the 1991 Peakers of Japan, have had to reconcile with:
No longer any winning price exits available in their lifetimes:
Real Residential Property Prices for Japan (QJPR628BIS) | FRED | St. Louis Fed
And the Chinese are now experiencing, alongside NZ.......
Real Residential Property Prices for China (QCNR628BIS) | FRED | St. Louis Fed
They will hike in December also, taking the OCR to 3.25%.
In my opinion they are going to start hiking after they needed to. Ie in my opinion they should have started hiking late last year and now already be at 3%, then doing the waiting and watching in the second half of this year. Instead they did the waiting and watching when they should have been hiking, and now they will start hiking when they should be waiting and watching.
They where split vote last meeting and Govnor had to cast hers, I doubt that the momentum of inflation has reversed, only opinions on what "might happen" time to tack off the lee shore, get some height or buy some safety I suggest.
It will hurt the economy but this is not time to gamble on what might happen, its only 25bps.
They can't predict the future and apparently not even the past: 2% has already happened in many places since the beginning of the year.
i keep getting emails from some platform telling me about 1.8% drops each month
' "All up, the risks around our house price forecast are shifting to the upside'
Does this statement mean that for the ANZ the uncertainty around their house price forecasts are increasing and for some reason they don't know what will happen in the future?
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