Independent economist and speaker Tony Alexander predicts that the New Zealand property market would recover quickly despite the severe impact of the COVID-19 pandemic.
Alexander explained that house price drops are “short-lived” and rare, with previous recessions showing that house prices plummet as GDP drops then increase again once the economy recovers.
“Periods of price decline are rare, and they are short-lived. Opportunities to buy in a weak market don’t last long,” Alexander told Landlords.co.nz, adding that significant price declines are on the way. Still, they will “not represent the true picture for the relevant markets overall.”
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Meanwhile, ASB economists predicted that house prices would plummet in the next six months as New Zealand’s property market continues to see the impact from the pandemic.
Mike Jones, a senior economist at ASB, said the economy is heading for a recession despite the official cash rate (OCR) cut and record-low interest rates.
“The economic fallout from the coronavirus outbreak will have implications for NZ’s property market. Both demand and supply are likely to take a knock. Demand is likely to tail off first and listings to follow as sellers pull back and await better conditions,” Jones told Good Returns. “We now forecast small outright declines in house prices for the June and September quarters.”