Home Economics

Home Economics: Bracing for Impact

13 May 2022

• House prices are falling but the bulk of the impact from the mortgage rate surge is yet to come
• Faster and larger lifts in mortgage rates mean we now expect modest house price declines through to mid-2023. All told, we expect around a 12% decline. In real terms though, this would amount to a 20% correction
• We expect a house price inflation recovery to kick in over the second half of 2023, tied to our forecasts for an upturn in net migration and flattening mortgage rates

Housing Insights: House Prices - From hero to zero in 2022

01 Dec 2021

• Supply and demand dynamics in the housing market are finally changing.
  
• Lofty house prices are at risk from the confluence of three big macro forces next year.
  
• We’ve updated our forecasts to take account of these risks, and now expect small falls in house prices over the second half of 2022.

Home Economics: Upcycling

25 Aug 2021

• We’ve upped the amount of ‘cycle’ in our house price inflation forecasts: more this year, less next.
• Therecent COVID outbreak means a chunk of activity will get postponed, rather thancancelled. But we don’t think this will have a lasting impact on the houseprice outlook, assuming the lockdown is brief. 
• Higher mortgage ratesare a gamechanger. But most of the house price impact will occur next year. Wehaven’t materially changed our mortgage rate forecasts despite the RBNZ’sAugust pause. 

Housing Insights: Can we cope with higher mortgage rates?

29 Jun 2021

• We find households in aggregate have plenty of buffer to cope with higher mortgage rates. Household gearing and mortgage serviceability metrics are at low levels.
• But there are some sensitive spots, such as new entrants to the housing market. There’s also a bit of re-set risk out there – 77% of all mortgage debt is on fixed-rate terms of less than a year.
• At a macro level, the RBNZ will get more bang for its buck when interest rates eventually do rise. Higher mortgage rates are also a key factor behind our view house price inflation will slow down from here.

Housing Insights: No hard landing for housing

15 Apr 2021

• No signs of slowing from March housing data, as they pre-date government announcements.
• We expect the market to cool from here.
• We’ve lowered our house price forecasts, but not aggressively so. There are still plenty of supports out there.

Home Economics: Simmer down

10 Mar 2021

• Pace of house price increases to slow from here.
• As mortgage rates bottom and LVR restrictions return.
• We don’t expect outright falls in house prices. The housing shortage is easing only gradually and mortgage rates are not about to race higher.

Housing Insights: Canterbury’s Housing Supply Crusade a Recipe for Auckland’s Blues?

10 Dec 2020

• House price inflation in Canterbury has tracked below most other regions over the past 10 years. Houses in Canterbury are consequently much more affordable than elsewhere.
• We perform an Auckland vs. Canterbury case study toinvestigate why this might be the case.
• With demand conditions similar, we find Canterbury’s strongsupply response to be the most likely driver.

Housing Insights: Housing boom - who's buying

21 Oct 2020

• Investors and first-home buyers have been the most active borrowers recently.
• High-LVR investor borrowing in particular has jumped.
• The central/lower North Island, notably Wellington, are the tightest markets amongst the regions.

Home Economics: Housing shortage sustaining house price momentum

13 Oct 2020

• Blink and you would’ve missed it. The housing “correction” is behind us.
• A more severe housing shortage, a less gloomy outlook for the labour market, and the RBNZ’s effective “green light” for asset price cycles all promise to keep house prices rising at a rapid clip over the coming 12 months. Flat-lining net migration and some roll-back of policy support will slow rather than stall the market next year.
• We have materially upgraded our forecasts. We now expect annual house price inflation of 9% by year end, and have flipped the small negative we had in for June 2021 to an 11% positive annual increase.

Housing Insights: Lower mortgage rates…higher house prices

26 Aug 2020

• We lower our mortgage rate forecasts.
• And lift our house price forecasts.
• We now expect national house price inflation to fall 2.8% by March, milder than the 6% fall previously forecast.

Home Economics: Doom or Boom? A post-lockdown housing stocktake

21 Jul 2020

• Recent housing commentary appears to encapsulate everything from doom to boom. We stocktake the post-lockdown state of house prices, rents, turnover, and inventory to try and provide some clarity.
• We’re left happy occupying the less pessimistic end of the house price forecasting spectrum. In fact, if anything the recent run of data and anecdotes have come in on the stronger side of our view. Still, it’s early days and we suspect pent-up demand will fade in coming months.
• Our overall view remains unchanged. We continue to expect a modest 6% fall in NZ national house prices.

Housing Insights: Thinking about the new normal for housing

29 Apr 2020

• NZ’s housing market will emerge from lockdown into some big headwinds.
• House prices are likely already falling, but estimating how far/fast they fall is difficult.
• We provide our thoughts on the key factors to consider.

Housing Insights - Runnin' on empty: when will home listings rise?

29 Apr 2020

• Housing inventory is at rock bottom levels right around the country.
• We find some evidence to suggest listings, at least in Auckland, should rise from here.
• A failure to do so could see prices bust through our house price inflation forecasts.

Home Economics: Housing immunity about to be tested

17 Mar 2020

• The NZ housing market got off to a flying start in early 2020.
• But COVID-19 has changed the game. The NZ economy is headed for recession, and we have slashed our house price inflation forecasts accordingly.
• We are now forecasting small house price declines for the next two quarters, and annual house price inflation to slow to zero by March 2021.

Home Economics: Time to upgrade

17 Dec 2019

• The latest indicators suggest the NZ housing upturn is gathering steam, broadly as we’ve been expecting.
• The Auckland market has reawakened, joining already fizzing regional markets.
• We kick the tyres on our house price forecasts, and upgrade slightly our view of Auckland and Canterbury.

Home Economics: And so it begins

22 Oct 2019

• The spring lift in NZ’s housing market we’ve been expecting appears to be upon us
• The Auckland market is looking far more sprightly, while hot regional markets have lost a little momentum
• We continue to expect nation-wide house price inflation to pick up to 5-6% yoy by mid-2020.

Home Economics: Bracing for spring growth

26 Aug 2019

• We expect nation-wide house price inflation to pick up from the current annual pace of around 1.5%, to 5-6% by mid next year. Spring will be a key test of our view.  
• The RBNZ’s determination to get kiwis borrowing and spending could see a more enduring cycle take hold. But we think there are enough offsetting factors out there to limit the extent of the upturn.
• July housing data were consistent with the idea that the housing market may be slowly turning higher. Although, as our Regional Heatmap shows, conditions remain highly variable across the country.

Home Economics: Breaking infrastructure barriers

06 Jun 2017

Infrastructure provision is one of the biggest challenges councils face across the country.

But, current infrastructure funding models have contributed to under-investment in housing-related infrastructure.

As a result, Councils need to be open to a broader range of funding methods. 

Highly regulated and highly priced

12 Aug 2016

The Auckland housing market is highly regulated and highly priced.

Regulations reduce land development capacity and create inflexible planning processes.

The proposed Unitary Plan is unlikely to dramatically improve the housing supply response.

Sharing Auckland's pain

19 May 2016

Auckland’s housing market problems are not unique.

Other high-priced cities have comparatively sluggish housing stock expansion.

Land use regulations are a likely influence on house price appreciation.