They revised their previous forecasts following changes caused by low interest rates
After movement in the housing market due to low interest rates, ASB economists now expect more house price growth in the coming year – revising their previous forecasts.
The economists previously predicted a 5% to 6% growth next year, but now expect a 6.5% house price growth nationally – with regional New Zealand expected to have the strongest growth at 7.7% in 2020 followed by 3.4% the year after.
Meanwhile, Wellington is expected to have the fastest price increase than the other main centres, with 7.6% in 2020 and 5.5% in 2021.
Read more: Nelson median house prices hit record high
Mike Jones, senior economist at ASB, said Auckland’s market had bounced back faster than they had expected – thanks to low interest rates.
“The turning point had been the end of the capital gains tax proposal in April. Investors had adjusted to the new environment and were re-entering the market,” he said, as reported by Stuff.co.nz.
“Mortgage rates fell steadily through to around November this year, and our rule of thumb is that it takes about six months for mortgage rate changes to feed through to house prices. The effect so far has been large,” he continued. “Debt servicing costs have fallen back to the low levels of the prior decade, despite the average household debt burden increasing steadily over the past few years.”
ASB economists expect a 5.5% house price growth in Auckland in 2020 followed by 4.3% the year after.
