a 25 per cent increase in the average asking price last year. The firm’s sales director Gavin Lloyd said that after entering the $900,000 bracket for the first time in November, the national average asking price has shown unprecedented growth, breaking record continuously. Risks for the housing market are now increasing as a result, as economists warn that buyer sentiments are evolving from “fear of missing out” to “I’m not paying that”.
Over the past couple of months prices were down nationwide and ANZ economists say the slowdown was in line with its expectations. The bank has downgraded its house price outlook for this year to a 10 per cent decline. Last month, the year-on-year house price increase in New Zealand fell to 18.7 per cent from the 30.4 per cent cycle peak. According to ANZ chief economist Sharon Zollner, lower sales volumes, rising listings and other key indicators suggest more slowing can be anticipated over the coming year.
“Some of it might be Omicron disruption, but we suspect the majority of it represents a fundamental shift in the market,” she said, adding that affordability constraints, tighter lending rules and other market headwinds have led to a shift in attitude from “from FOMO (fear of missing out) to INPT (I’m not paying that)”.
Amid intensifying inflation pressures, ANZ anticipates more aggressive rate hikes by the Reserve Bank, projecting the official cash rate to reach 3.5 per cent by April next year, and a higher interest rate outlooks means stronger market headwinds. “We now expect house prices to fall 10 per cent in the year to December 2022. That’s a similar-sized contraction as the one following the global financial crisis,” Zollner said. “But given the very strong starting point, we’d still call this a soft landing. Our forecast would still leave prices up a whopping 30 per cent come December compared to December 2019.”
