Westpac economists forecast that New Zealand property prices will soar by 17% in 2021 – one of the strongest rises in the nation’s history on the back of rock-bottom mortgage rates.
However, prices will inevitably fall when interest rates inevitably rise and dwelling supply catches up with demand:
We’re forecasting a further 17% rise in house prices over this year – a very strong pace compared to history, but implicitly a slowdown from the current monthly pace. We believe that mortgage rates have reached their lows for this cycle, with long-term interest rates now starting to head higher as global economic sentiment improves. The impact will become greater as the prospect of OCR hikes draws closer; we expect house price inflation to turn negative by 2024.
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Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
