a 6.5 per cent decrease in the national median house price in the month of September, in comparison to August, it was still 15.4 per cent higher than it was a year ago, at $689,000. Meanwhile, CoreLogic’s latest House Price Index shows a 4.8 per cent increase in prices nationwide over the third quarter, and by 1.4 per cent in a month in September.
Accordingly, it has become evident that the market will continue rising indefinitely, further aggravating the ongoing housing crisis in the Trans-Tasman nation. However, experts are of the view that while prices continue to increase, many factors which are driving the market have in fact changed.
Firstly, with the Reserve Bank’s latest loan-to-value ratios set to come into force on Monday (1 November), mortgage rates have begun to rise firmly over the recent weeks. On other hand, since 1 October, the government has been gradually introducing the new investor tax policies with the aim of boosting supply and restraining demand.
Moreover, experts project that between 48,000 and 105,500 new homes will be added to the market over the next five to eight years, as part of the additional planning reforms announced last week to help increase supply and improve affordability. At the same time, it cannot be forgotten that migration has been put on hold as a result of border closures, which has slowed population growth, thereby providing an opportunity for supply to catch up with demand.
According to ANZ chief economist Sharon Zollner, these mounting headwinds mean the New Zealand’s housing market has finally peaked. “There is about a three-month lag with prices, but the pace of monthly price inflation is now well off its cycle peak. That means annual inflation is poised to slow over the coming months too,” she said.
