Westpac report says the good times in the residential property market will "end very soon"

The housing market is facing a looming slowdown, according to Westpac's chief economist Dominick Stephens.

In a Home Truths report on the housing market Stephens said although the market was positive for now, it will soon slow.

"In our view the good times for the market are going to end very soon," he said.

"We are forecasting a small decline in house prices in the second half of 2018."

The report pointed to six factors that would likely cause a market slowdown:

  • Foreign buyers will be banned from buying existing residential properties, probably by the middle of this year.
  • Ring fencing tax losses on residential investment properties, which means investors won't be able to offset any tax losses from a property against other income.
  • The Tax Working Group will probably recommend a Capital Gains Tax, although the family home will likely be exempted.
  • Mortgage rates are more likely to rise than fall 
  • Net migration is expected to keep slowing while home construction will keep rising.

"This is a prodigious set of negative factors, but for a few reasons we are forecasting only a slight house price decline, rather than anything dramatic," the report said.

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Wondering if it will be a slight decline across all property types or some will fair much worse such as apartment developments and sections/subdivisions in holiday locations.

Heard this all before & yet didn't happen.
Unless the banks are still focusing in on Auckland's property market? When we are so much bigger than Auckland. Prices haven't dropped at ALL in my part of the world & the OCR hasn't risen either...

"Mortgage rates are more likely to rise than fall"

Really? Why?

Yeah they've been saying this for years. Interest rates have stayed low. And so has the OCR, even with inflation consistently in the lower part if the 1 to 3% band over the last few years.

Probably partly having to compete for funding with a USA that's unwinding quantative easing and paying more for debt. That's a guess - I know next to nothing about international finance.

Because he works For a bank... he is paid by the bank... so the idea is to put fear in people so they fix in and the bank makes more profit. Basics

Bank economists have been putting fear in people for quite some years. Pretty much whatever they say do the opposite. 1 year fixed is the best option in my opinion

Yes just went for a 3.5% term deposit this week for 1 year.

Well, given a massive increase in house prices over the last 5 years, a "slight house price decline" is nothing to get excited about - if, indeed, it happens at all.

Well located houses will continue to fare well.

Poorly located properties (especially apartments/flats and cross-lease) are more vulnerable.



Well located houses will continue to fare well.

Poorly located properties (especially apartments/flats and cross-lease) are more vulnerable.

You;re either plagarising Granny Herald; quoting from your neighborhood REA's letter drop; or practising your repertoire for the next BBQ.

“quoting from your neighborhood REA's letter drop;”

You made me laugh. You are assuming he is not his local real estate agent.

Neighborhood REAs are an endangered species. Only the strong survive.

Hi J.C.,

Sorry, my friend, but your assumptions are incorrect.


As TTP says, you are assuming he is not a real estate agent.

I think you mean leasehold, as opposed to cross lease.



Agreed this is merely a cyclical oscillation in the plateauing peak. Leafy green suburbs will continue do do well, and the market will really go bananas after Chinese New Year.



You're not my wife - but you show all the signs of being a frustrated DGM (Doom and Gloom Merchant).

(It's extraordinary what DGMs will do to vent their frustration.)



Are you related to TTP? You write very much like him.




I can confirm that I am not related to TTP, one can but hope! I do however enjoy reading the writings of such like minded individuals, which is a rarity to find outside of the sanatorium.



Either TPP has become an actual virus, infecting others with his maddening writing style or someone is my new favourite satirist.

Hi gingernnja,

Thank you for your concern for my well-being Madame Ninja. I can assure you that the Doctors at said institution have cleared me of all viral infections.



You write "I do enjoy reading the writings of such like minded individuals", I wholeheartedly agree, it is hard to find such mental agility amongst the DGM's (Doom and Gloomers) that frequent this site.


TPP, imitation is the highest form of flattery


TTP, arghmmm, like I've been saying, FHB's should wait before committing to the biggest financial decision of their lives. A large number of vendors in Auckland have already discovered the trials and tribulations of trying to sell at yesterday's prices. Its over.

Given 'it's over', and you've stood on the posting 'Olympus' , what are you planning to do with the rest of your life? Spend more time with the Family?

Ex Expat, ha-ha Nice one!, he whos huddled in his hotel room, posting rubbish, while his family are out taking a break....

Are you really enjoying your holiday? Make the most of family :)

You're declaring 'it's over'? Why continue posting unless you find some new to comment on?


Ex Expat, the boom is over - DUH! I didn't declare it over so why are you obsessing over this one post, it's a little creepy. When the Auckland market became a buyers market, it was then the boom was over.

I'm back in Auckland ruminating over my future employment. Beautiful day in Kohi to do it. No hotel room, just a coffee at the Cafe then saying hi to the Cambodians at the Bakery when I buy lunches for the Children. Your example of what retired people do with their time is mighty worrying. Please tell me it's a conscious choice to be here and not the inevitable product of retiring with insufficient funds?

Did you spot the Jones Boy flying out, as you flew back in????

I generally fly back of the bus, so I haven't met him or WP on a flight.

Ha Ha - I think you nailed RP's position to a Tee, I would add bitter and envious !

Shoreman, lol!, nope :) Like Ex Expat hourly "Taxinda" rantings, you also add little of useful substance....

"Foreign buyers will be banned from buying existing residential properties, probably by the middle of this year."
But didn't Nick Smith tell us this would have no affect. Surely Westpac must be wrong

I heard it'll impact on around 3% of property sales.

these westpac property gurus predicted a mere 5% rise in house prices in 2013 and most self declared gurus predicted massive rises in interest rates from 2011 onwards. but one things for sure they are 50% correct all the time i.e it (their current prediction) has a 50 % chance it will happen and if it does westpac will be confirmed as our new guru.

Fake news...just ask the little man and eco birdy.

Supporters of the COW like 'The Man' will probably be most distressed by this news.

Property reset needs to happen.

Crash...could never happen...like Trump. like Brexit, like National ruling for ever, like the last time it happened https://www.greaterauckland.org.nz/2016/07/11/remember-the-last-time-hou...

Specuvestors hopes that wages would go thru the roof to allow the ponzi to continue will be unfounded as businesses would fold left right and center. A great example of wage inflation pressure is Fletcher's....billion dollar loss, very few can swallow that pill down. Housing costs should be a function of the local economy, not what speculators with access to cheap debt can stack up.

At its foundation this is the banks/specuvestors (domestic and foreign) vs. the average tax paying kiwi. Thank god for democracy so the average tax payer could change the direction of NZ to protect themselves what ever sovereignty remains in NZ.

Great start, looking forward to more. Bring on DTI limitations and an empty house tax. Its is the labour party after all...

Average man...

Not true! According to the latest email I received from my RE in Ponsonby. It's the best time to buy, astute investors should stock up their investment portfolio and reap that capital gain later on.

I thought you were repatriating to Dunedin when the time comes.

yeah, at some point. Dunedin is much better than Auckland.
In the mean time, staying put in Queensland as it is much nicer, cheaper, warmer and pleasant lifestyle (not GC though, it's a pit)

So you're going to move from the GC to Dunedin?!? Good luck with the change in climate

Hi Chairman Moa,

Agree that Ponsonby is a top suburb for investment - among the very best in Auckland.



"Ponsonby is a top suburb for investment - among the very best in Auckland" except too many dog poos from the "Real Housewives of Ponsonby" and their poodles

I don't think you know Ponsonby very well, what you're descibing is Remuera

Hi tothepoint,

Agree that Ponsonby real estate is a good investment at ANY price.


According to the latest email I received from my RE in Ponsonby. It's the best time to buy

Err.... your RE is saying the same thing as in this report, isn't it ? that because prices are going down , 'astute' and 'clever' investors could buy now and add to ur p'olio !

The best time to buy is when your friendly, neighbourhood RE is in need of another commission.

Why does Westpac keep forcasting pessimistic outlooks? They might be right (based on the stopped clock theory) but it's not actually helpful.

Well, well, well; Westpac is really onto it.
Pity Dominick hasn't been reading interest.co for the last six months.

Slight decline has already happened. Property which earlier was going for mid 900s are going for mid 800s.

More slight decline will be 20% to 30%. Is that slight ?

Slight decline is a mater of perception. May be for the author of the article 20% or 30% is slight but for many slight is appox 10% that has already happened and anything more from here (indication are) will be big

I think we will have a flat/slightly falling market for a few years. But I think the initial price 'shock' might be a bit greater than Westpac are predicting.

Isn’t it great that we have these accurate economists!
Not rocket science with all the measures being put in place by the COL!
It will backfire on the COL as they continue to unravel!
Watch this space for more adventures from this lot!

Unravel? I thought their objective was to improve the supply and affordability of housing. If the data indicates that they're succeeding, that is not "unraveling". Now Labor are likely to be equally as ignorant as National about the negative consequences of a deflating bubble and that is probably a more important focus for you.

Next, house prices can change for factors other than govt policy. You should understand that given what the world has been through in the past 20 years. If that happens, then it is not the actions of the govt that will have caused it, even though the disgruntled among the sheeple will look for someone to blame and the govt is an obvious target. Govts are not omnipotent. They are good at nurturing the conditions to support bubbles; but they're much less effective at preventing bubbles from bursting and negating their consequences. A cursory glance at recent history will show you that.

Furthermore, supporting the blue undies team over the red undies team is irrelevant when bubbles burst. To suggest that the National Party is some kind of infallible "force" that can control your future and fate is little more than delusion.

TM2, notably absent is your usual pitch that Christchurch house price performance will exceed that of the remainder of the country.

A bubble is not something to blame the Coalition for. Common sense says blame the other guys.


What can't be dismissed is that if major banks are predicting decline, this means that they will be tightening their lending criteria. Banks adjust to the risks they perceive, whether you agree with them or not. If they are perceiving risk and downside, this will affect the housing market, irrelevant of buyer/seller sentiment. You can only buy with what the bank will lend and when banks perceive downside, they lend with more caution.

Google "mortgage fraud NZ" and you will find the results are page after page of headlines reporting millions of dollars of mortgage fraud over the last few years. And of course, that's only the mortgage fraud that was newsworthy. Not the small fry mortgage fraud of every day people, exaggerating their earnings and downplaying their expenditure and that's if the banks were even checking that stuff.

I'm sure you've all seen the Big Short movie. And you probably remember, that Dr Burry's first hint that the housing market collapse was looming was the huge uptick in mortgage fraud, because this was also what had happened before the huge 1930's crash. We're not America, so their history won't necessarily be ours. However, if there has been mass mortgage fraud in NZ over the last few years and mortgage rates do go up, then the mortgage affordability crisis will be much, much worse than the RBNZ 2017 stress test report hypothesised.

Global interest rates may not rise. Maybe a crisis or some other crash in the world economy will prevent the period of growth that the world's economists are predicting in Europe and the US? Nonetheless, the OCR is not the only influence on domestic mortgage rates, a lot of borrowing is from offshore and those rates will go up.

Westpac introduces stringent new expenses process

The Westpac Group has updated its credit policies so borrower expenses will need to be captured at an “itemised and granular level” across 13 different categories and include expenses that will continue after settlement as well as debts with other institutions.

The changes, which apply to all loans submitted to any bank within the Westpac Group from Tuesday (17 April), aim to “provide a more accurate view” of borrower expenses so that the bank can “better determine their financial situation and repayment ability”.


Doris, well well well. The tightening and scrutiny has begun. Methinks mortgage fraud will become an endangered species very soon.

Initially in Australia, the tide is now going out through credit starvation. Its not hard to guess that price depreciation will expose more flaky loans that leads to more price depreciation. Cheap and easy credit is exactly what has made this the ponzi it is today. Could this be the makings of an Australasian Banking Crisis I wonder?

Surely, only a property flipper lies about their true income. They are focussed on the bigger picture and what a stake in the game. I guess if it turns sour they can then always blame the broker! I cannot see how Flippers have the intention of paying a mortgage down by installments long term. It's just a noose. Only by way of property disposal (at a profit) is their perceived exit by right. Also, a lot of these loans are (expiration based) interest only. As the market further weakens, property disposal may not be possible. Talk about a trap.

Minsky Moment.

I recall one or two property spruikers spouting on this site about how safe property was because you could look at it and touch it. That unlike equities it could not be affected by outside influences. Now that we have a new government that is honoring what it promised during the election bringing in a few changes that are starting to affect the New Zealand housing market we are starting to see a few of them squeal. Their beloved market is capable of being affected by changes that are outside their control. They were warned but greed generally wins and good judgment is put aside. Just imagine how hard they will squeal when the government gets rid of negative gearing. That will be interesting times.

Gordon, from a speculators mindset, property might be safe to touch and feel. The bank has ultimate power to confiscate, hold and then sell.

100% correct

Only if you don't pay your mortgage.

Not strictly true. The agreement Basicaly allows them to do what ever they want.

Great news for FHBs. Hope it happens quickly...
So, will Westpac reassess the loans where LVR has worsened and ask the borrowers to top up ?

In cases where people are due to come off interest only terms would be an example.

RP, ChCh property is a great investment providing you by positively geared as an investor!
You can forget about interest rate rises in the future as the U.S. can not afford to raise rates much at all!
NZ Govt. Is not doing anything towards increasing productivity of business’s and in fact totally the opposite with
The increase in Labour costs!
Economists have been predicting rises for many years and what actually happened?
That’s right they actiually dropped,

THE MAN2, more positively geared rentals provides the Coalition much needed tax revenue repair our neglected infrastructure. Ring fencing will weed out many novice negative gearers.

The Man 2 - I'd be careful assuming interest rates can't rise because someone, or a population, can't afford them. Research shows that something like 7 out of every eight recessions globally are caused by central banks hiking rates too far and damaging individuals - but remember that period of damage can last more than a couple of years, and it damages the complacent the most as they can't comprehend it happening and aren't prepared for it i.e. they have no understanding of history even if you only have to go back to 2006/07 in NZ for the last bout.

I hear this argument that US can't increase interest rate. Is that because huge debt they have ?
Private debt or public debt is the main factor against interest rate increase?

All good , we need the property market to come off the boil

It has already come off the boil, it just hasn't "crashed" like Retired-Poppy claims

Yeah it has come of the boil and is first step before it falls..... To what level will it fall has to wait and watch.

Question is not if it will fall or not BUT by how much will it fall.

2018, year of the Minsky Moment?

I'm taking bets now on what will be the next personality to emerge from a certain commenter on these pages. Shortest odds on offer are on the emergence of a punk character, a bit like Viv from The Young Ones. Teeth will be filed to a point, and the moniker will be something like Pointy Tooth.

Now is the best time to buy?? A clarion call from distressed REA's suffering a drought in sales. Any suckers out there?

Would 10% less rain be a drought?

Yes, if you were currently using 100% of your water and relied on future rainfall increasing by 10% more per year to meet your water related needs.

RP, Yes ring fencing will ensure that many investors will sell up!
This will create a rental shortage in Auckland and will backon the COL.
Thing is that this government has a lot more problems than worry about the shortage of affordable using,
They are going to be absolute toast in under 3 years as the 2 losing parties that Labour amalgamated with will start fighting each other

I get awfully confused about this COL thing you angry children keep barking about. Coalition of LOSERS right?

The coalition of losers are National, The Maori Party, Act and United Future. How does that relate to current events. They are a bunch of has-beens.

Please explain.

They are in power so I can only presume Labour won the election. National are the opposition so they must have lost the election. National tried to destroy NZ First . It backfired and it lost them any chance of getting Winston to pick them . Get over it . Labour ended up running a better election race.

National won 3 elections in a row!
This last election the government was formed by 3losing parties that had to combine their seats to get into power.
Since they have been in power, they have performed as well as we thought they would!
Hopeless and it is going to continue as the leaks are showing continuously.

MMP and Labour played it smarter this time than National did and National lost. One would think Labour broke the rules. If Labour did something illegal they would simply not be the government. Get over it. Be happy. What do you have to worry about? You tell us you are wealthy or so you say.

No they didn't.

They had to form a "coalition of losers" with Act, The Maori Party and United Future.

Then at the previous election this "coalition of losers" lost! The Maori Party and United Failure don't even exist anymore they lost so badly!

Your ramblings are just nonsense. The only coalition of losers is the previous coalition government that lost the election! Anything else is just wishful thinking! Glad we cleared that up.

The new government (the coalition of winners) seem to be performing pretty well if we use their election manifestos as a checklist. The squealing as they slowly turn the screws on the social parasite class is icing on the cake. Delightful.

Brock dude, you've got to get with the picture - when National does it, it's brilliant and winningy bigliness, super smart genius, the bigliest! when Labour do exactly the same thing they're a coalition of losers. It's really not that hard to understand - National are awesome, everyone else is a coalition of losers. GOOOOO team National!!!! yay!

Quick test for TM2, while you're busy blaming the current Govt for your failing enterprise, who said the following -"I think it’s a good thing that prices have flattened out. Everyone gets a bit of time to think about what they can afford, we’re able to get on with supporting the building of 200,000 more houses over the next six years, and gearing up the infrastructure that goes with that.”

It will be interesting, as the disaster of Chch rebuilds unfolds, to see how he will manage to blame this government for it.

But, but, but the GFC, the handling of the ChCh earthquakes, that shows you why National are the bigliest and bestest party, and the coalition of losers are losers and everything!!! Surely you're not implying that the Christchurch rebuild has been an unmitigated disaster, resulting in National losing seats down there at the last election?

Next you'll be trying to tell me the GFC barely touched us, which only idiotic economists and their "facts" think is the case, that would be insane!

If you had been “handled” by Mr Brownlee’s wise guys for your EQ claim you would not have said what you said. Also in the interests of non partisan behaviour, who is to say that Dr Cullen could not have steered us through the GFC equally well.

Would 10% less rain be a drought?

Hmmm. To a REA whom I know who hasn't had a single sale since Oct.2017 ( & there probably could be many more in the same boat), its not a drought.Seems more like a FAMINE !!!

My heart is bleeding. Do they have a givealittle page?

Good times coming if you are in the market for a slightly used Audi or BMW?

Just steal an abandoned one at the airport.

I like to look at the big picture. As a buyer and a seller individual agent's fortunes are not my concern.

The juvenile sniping and silliness is either ruining these pages or making them more fun. I haven't decided which.

The answer to your question depends on wether you visit this site for solid data or for a cynical laugh, unfortunately, over the last 2 years it's moving more towards the latter

I joined in 2016 and learned a huge amount about the NZ economy here. But it started getting really, really polarised in the lead up to the election and has continued since then.

But I think that is also somewhat representative of NZ. I see and hear much of what happens in flame wars in these comments out in the real world. I hear random younger people on the bus saying they can't wait for the boomers to die, almost all the uber drivers i've ever met tell me they are highly qualified in their home country but can't get a decent job in NZ, because NZ-ers are racist, I've seen plenty of older people tutting at Asian people and of course, everyone hating on landlords and RE agents, apart from the RE agents and landlords who are hating on the coalition. If anything, I am grateful that the comments here are more polite and better informed than stuff.co.nz. That's where I would go if I wanted to bathe in misanthropy and strawman logic.

Hi Ginger Ninja- enjoyed your open, honest and common sense replies (as well as Retired Poppy!)over the last 5 months of reading these comments (both with laughter and disbelief...). As my name suggests, I am returning my family back to Perth due to two reasons- the racism of the community that I moved to, and the absolute disgust of NZ being the most expensive country in the world (property, food and petrol). In Perth as a Maori I was absolutely respected as a highly qualified and hard working kiwi (Maori with a law degree). Returning to my place of birth, Taranaki- people give me what we deem as the 'hate stare'- one similar to a huge dog turd on the bottom of ones shoe. The racism is unbearable and I refuse to allow my children to be treated as a second class citizen in their own land. Perhaps I have missed a bullet- I was watching this page hoping for the inevitable burst, which will come. So I could actually afford a property. I have a very high wage for Taranaki, yet am no where near the quality of life in Perth- double the wages yet half the costs (I have a rental in Perth- developers are advertising a 3 and 2 new build, for less than $300k in the same area... I paid for my 4 bed room house $370k...). Yet my wage, would have been the same as what I would have got in the 90s, would have got a house for $60k. That same house is now worth $600k. My line of work is in the area of the disadvantaged- it was one the reasons why I returned- to help others. What I see is the poverty of the community at the highest levels in the World, the highest housing prices in the World, the highest suicide rates in the World, the highest homelessness rates in the World. We sometimes forget on this forum, the actual devastating effects to the groups that will never have an opportunity in NZ to own a house. Rental slavery binds those who are trying get ahead (my leaky rental with a great view is $430 p/w in New Plymouth...). A real shame- but I will be heading across the ditch. And how things are going, and that Perth's economy is picking up exponentially, I believe many more Kiwis will be following very soon. Just my thoughts.

BacktoPerth, You have to go wherever will offer your family the best shot at a decent quality of life, it's a damn shame that NZ isn't that place but i'm not surprised to hear any of what you describe. I have been shocked by the level of homelessness and poverty in NZ, especially after all the international media crowing about NZ's "rock star economy". It says a lot that during the"boom years" poverty and homelessness have actually increased. So much for the trickle down effect.

The problems of growing wealth inequality and underfunded infrastructure over the last 10 years will take a long time to resolve (if at all), so if you can improve your situation then absolutely go for it. And I wish you the best of luck.

It's hard for me to speak to the experience of racism as a white person, i've never been treated like a 2nd class citizen because of my skin colour and I can't really grasp how much that would mess with my head. I witnessed plenty of racism in the UK. Mostly during my childhood. And then it began to disappear and I really believed it was dying out, until the Brexit campaign, when suddenly all the hate and bigotry spilled out again.
Made me pretty ashamed to be British.

Hope Perth is great for you and your family.

Should live in the countryside (I know thats not your place to live) GN we talk about the cost of beer, are the fish biting, what's the wind like (good for sailing and fishing),of course the rugby and our kids. And most obviously verbal diarrhoea about nothing.

I have different political views to my friends, but we never talk about that stuff, its a personal choice, you just get on with things. I come on here to get a holistic view, not withstanding the few unusual types with agendas its quite good hearing about fundamentals.

What disappoints me about the uber and taxi drivers, cause I heard quite a few myself dissing NZ, is that if its so good in their country why are they here. I get that about qualifications, but I know if I'm employing, I'm employing anyone that makes me look good, and gets on with the team. The team thing is a biggy. So if they are calling NZers racist its not a good start.

I'm a Maori as above, but I rarely see the racism, I hear about it and see a lot of things in stuff, that is very hard to understand, I call them the Don Brash wannabees and I find it disappointing. But I rarely experience it. I'm not sure its racism as such, yes its attached to a race, but I think its more ignorance and maybe a little jealousy, kind of like banjo players in the boon docks like Deliverance.

Good luck to you Backtoperth, Perth is a nice place, great weather, great beaches, its a shame we lose people like you the house prices are disgusting. I especially like that you help people out not like some on here. Keep up the good fight Kia Kaha.

Kia ora e hoa! And also to GingerNinja as well. Totally agree with what you both have said and I am personally very sad that I have had to make the decision to return to Australia- its so incredibly hard to get ahead in NZ. Ill try and make some money through a business in Australia - thinking about selling sandpaper, as there is a growing demand in the cricket fraternity...!

Anyone following the Royal Commission Enquiry into Australian Bank's Lending Practices? I must admit, even my jaw dropped open after hearing one of the lawyers involved rattling off payouts by the big four banks to the tune of millions of dollars to bank customers in private deals after loans turned bad. These numbers are pretty astonishing and are across all lending platforms including interest only loans, credit card approvals, and just about every other line of credit you can imagine. Most of these were approved by the banks via their "Broker Channels". Just in case people aren't aware of this, the brokers work for the banks and not the customer. Any loan that you obtain via a broker is usually at a much higher percentage rate compared to the banks customers that approach the bank directly. Brokers just clip the ticket. This is how they earn their income and has always been this way, but at least now it is all coming out and so are new regulations being worked through by ASIC and APRA to reduce LVR's back down to within the 3.5 to 4.5 % of the purchase price over the near medium term. Expect more government controls to reign in property prices, but this will have a major impact on existing values as buyers will be facing much lower loan approval limits to purchase housing.