Uneven price falls forecast
How much your house’s value might fall this year will depend a lot on location, economists say.
ANZ’s latest report includes an assessment of which regions are likely to be most affected by the Covid-19 downturn.
The bank’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.
The Queenstown-Lakes, Mackenzie, Kaiko¯ura, Westland, Taupo¯ and Thames-Coromandel districts were most exposed.
ANZ senior economist Elizabeth Kendall said Auckland could experience bigger price falls on average than most 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.
The report follows CoreLogic research that showed Queenstown, Christchurch and Auckland were most exposed to a downturn.
For Queenstown, that was because nearly 20 per cent of its economic activity was from accommodation and food services that were likely to be hit hard.
Twenty per cent of its 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 Whanga¯ rei could be more resilient.
Kendall said rents would be affected but probably not as much as house prices. 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 the future, she said.
Estimates of supply shortages did not take into account how
Elizabeth Kendall ANZ senior economist
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 . . . 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 Kiwis 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 paying reduced rent because of Covid-19.
Nearly half of those with mortgages said they were worried about missing a loan payment in the next three months.