WELLINGTON (CU)_In its last fiscal forecast earlier this year, the New Zealand Treasury projected that over the next year, house prices would increase by 0.9 per cent, followed by 2.1 per cent in 2023 and 2024, and then by 2.5 per cent in 2025. Based on figures published by the Parliamentary library, these projections would see the national average house price escalate to $933,322 in 2025.
However, latest house price figures published by CoreLogic NZ, an independent provider of property data, in the month of September, the national average house price escalated to $950,229. This would mean that the Treasury’s house price projections have already been exceeded, four years ahead of schedule.
ACT deputy leader Brooke van Velden, these figures are utterly concerning, not just for first-home buyers, but to anyone anxious about the ongoing escalation of house prices. “It raises the question of whether the minister remains confident in the model Treasury is using to make these predictions on house prices, because they influence how people are responding to the housing market,” she added.
Meanwhile, a Principal Economist and Director at Infometrics, Brad Olsen, noted that while it is forecasting house prices is not an easy task, his calculations also show that house prices have already surpassed Treasury’s forecasts for 2025. He added that this highlights the extraordinary acceleration of price growth encountered by the housing market over the recent month to a more stratospheric position, a lot sooner than the department had expected.
“The key reasons prices have been rising at such a clip are historically low mortgage rates, the fact we’ve had an emergency level of monetary stimulus running when the economy has not been in emergency mode, and the very low levels of housing stock for sale,” Olsen said.
