Population and labour income growth may also take part in boosting the housing market
ASB economists believe that low interest rates will boost national house prices to new heights over the coming year, Stuff.co.nz reports.
Nick Tuffley, chief economist at ASB, said it’s possible for nationwide house price growth to hit 6% by mid-2020.
He added that Auckland would recover from a 3.1% price drop this year to stagnate next year, Christchurch would move from a 0.5% drop this year to 2% growth next year, while Wellington and regional NZ would shoot ahead to 9.3% next year.
Read more: The New Zealand economy is under pressure – ASB
Tuffley said that sharp falls in mortgage interest rates as well as population and labour income growth will boost the country’s housing market.
“We have been hearing more stories about investors coming out of the woodwork again, cautiously,” he said.
He added that the closer the term deposit rates reach zero, the more appealing the property market will be for investment as lower rates could help investors cope with lower rents.
Tuffley also expected that Auckland prices will start rising again in the longer term while the “gentle decline” seen over the last 18 months would finally stop in the near term.
Meanwhile, Wellington’s price growth is expected to rebound due to the city’s significant supply shortages.
"The number of houses for sale is incredibly low compared to the rate of turnover,” Tuffley concluded.
