House sales are down 30 per cent compared with a year ago, with prices expected to fall 5 per cent this year and remain flat for the next five years.
That’s the grim prediction from Westpac’s economists who say residential property prices have “screeched to a halt, with essentially zero price movement in the past eight months”. Prices stopped dead in April last year, they say, after rising by $8000 a month. Had it not been for New Zealand’s strong economy, wage growth and a 21-year unemployment low, house prices would have fallen earlier and more aggressively.
Rents are forecast to rise 6 per cent a year as would-be first-home buyers avoid home ownership, deterred by high interest rates and the chance that fixed rates may drop slightly by mid-year. These people can afford to pay higher rents.