How might your house price move?
Christchurch is vulnerable to Covid-19 house price shocks, researchers say. Susan Edmunds reports.
How much your house price might fall this year will depend a lot on where you live, economists say.
ANZ’s economists predict a national house price fall of between 10 per cent and 15 per cent this year.
But they warned the impact would not be evenly felt. Areas with more exposure to tourism and migration, and with recent high rates of building, were more exposed to house price falls than others, they said.
That left Queenstown Lakes District, Mackenzie, Kaikoura, Westland, Taupo¯ , and ThamesCoromandel most exposed. Christchurch was also ‘‘very vulnerable’’ – exposed to migration changes and somewhat exposed to tourism and building trends. Dunedin was less exposed.
Economist Elizabeth Kendall said Auckland could also experience bigger price falls on average than much of the country.
‘‘We will see recovery on the other side but it may be slow and house prices may settle at lower levels relative to income because the high prices no longer make sense . . . Queenstown may be affected for some time because it will take a long time for tourism to come back online.’’
Queenstown would also not see the population growth that had been predicted, as migration dwindled.
It follows Corelogic research that showed Queenstown, Christchurch and Auckland were most exposed to a downturn – Queenstown because nearly 20 per cent of its economic activity was from accommodation and food services that were likely to be hit hard.
But it noted that there were factors supporting the Garden City – ‘‘Housing affordability differs across the country and this will also play a role in relative performance over the coming months and years. Christchurch, for example, looks more affordable than has been the case for several years, potentially making it more resilient than our rankings imply.’’
Twenty per cent of Queenstown’s residential housing stock was listed on Airbnb and that could affect rent prices if the owners pulled it back into the long-term rental market.
CoreLogic said Invercargill, Hamilton and Whangarei could be most resilient.
Kendall said rents would be affected but probably not as much as house prices.
She said, while there was a housing shortage, it was hard to measure and the outlook for it was uncertain.
The supply and demand factors could change in future, she said.
Estimates of supply shortages did not take into account how household composition could change when the economy did.
‘‘When housing is less affordable or employment prospects are worse, people tend to move into shared living arrangements – this has been seen increasingly since 2014 as house prices have risen further. And higher unemployment also means bigger households.’’
But while economists expect a downturn, New Zealand households aren’t so sure.
New data from the Reserve Bank showed an expectation among New Zealanders that house prices would be flat over the next year.
Just over 60 per cent of renters were worried about missing one or more rental payments in the next three months.
Almost 10 per cent said they were already paying reduced rent because of Covid-19.
Just under half of those with mortgages said they were worried about missing a loan payment in the next three months.