Eye on city house prices
Real estate drops in Australia are being closely watched by the New Zealand market
Some New Zealand economists believe Auckland’s housing market could follow similar trends as major Australian cities and experience real estate price drops.
Sydney house prices are down 5 per cent according to CoreLogic figures and Melbourne prices are down half a per cent for the first time in six years.
ANZ chief economist Sharon Zollner told Q+A last night she was watching the New Zealand market with interest because of what was happening across the Ditch.
“Another risk has emerged on the horizon and that would be contagion from a more marked slow down in the Australian housing market than is currently expected,” she said.
However, Craigs Investment Partners’ Mark Lister told the Herald while it could happen, he believed a price decrease was unlikely in the current economic climate.
“It’s not my expectation that it will happen here, not while our economy is as strong as it is — but you’d be very naive to rule out the prospect of house prices falling.
“I think it’s entirely likely that you see house prices over the next four or five years much more subdued than they have [been],” he said.
Australia and New Zealand have similar economies and housing markets given our trading with China and similar mentality towards property ownership.
The housing market in Australia’s main centres had boomed over the past decade but Lister said there would have to be a dramatic shift here to alter the New Zealand market.
“You’d need to see something get ugly, like China have a major hiccup or us to have some sort of localised issue like foot and mouth disease,” he said.
Reserve Bank Governor Adrian Orr told Q+A a price drop was possible but was not within the Reserve Bank projections.
“You could see a similar fall — that’s not in our projections though. It’s certainly within a realm of possibility, likewise you could see a rise,” he said.
Lister agreed and said if there was a decline, it was unlikely it would be larger than the rise the housing market has experienced.
“A 10 per cent fall in Auckland house prices would still see them a lot higher than where they were five, six, seven years ago,” Lister said.
“House prices go up and down, that’s normal. People shouldn’t panic about that.”
I think it’s entirely likely that you see house prices over the next four or five years much more subdued than they have [been]. Mark Lister