Mortgage rates will fall, and that has improved the housing market outlook, says Westpac.
In the latest Home Truths report, Westpac chief economist Dominic Stephens said the game has changed.
“We are now forecasting essentially flat prices over the remainder of 2018, followed by a sharp, but short-lived, rise in prices for early 2019,” he said.
Stephens said he expects the loan-to-value ratio (LVR) loosening will be announced in November and implemented in January, boosting the market early next year.
“We can be confident that a drop in mortgage rates will have a positive effect, because we have seen that many times in the past.”
The economist highlighted the uncertainties surrounding the foreign buyer ban, particularly how much negative impact it will have. The ban will affect Auckland to a greater degree, where prices are posed to fall but rise slowly in most other regions.
Westpac forecasts a 1.5% nationwide house price increase, lower mortgage rates, looser LVR limits and an improving economy in early 2019. For 2020, however, a negative outlook remains with mortgage rates expected to rise and house prices decline by almost 3%.
Buyer ban won't help improve affordability – REINZ
OCR to remain unchanged until 2020