fbpx

Tony Alexander: House prices will be rising before the end of the year

Picture of PropertySage

PropertySage

TRUSTED PROPERTY MANAGEMENT

Tony Alexander predicts that house prices in New Zealand will rise before the end of the year, following a recent cut in the Official Cash Rate by the Reserve Bank, which is expected to continue decreasing in the coming years. However, challenges such as job insecurity, high property listings, and a weakening rental market may slow the overall recovery despite increasing buyer interest.

Share Post:

Tony Alexander’s analysis indicates that house prices in New Zealand are expected to rise before the end of the year, following a recent drop in annual inflation to 3.3%. The Reserve Bank of New Zealand (RBNZ) has cut the Official Cash Rate by 0.25 points to 5.25%, with further reductions anticipated, potentially dropping below 4.5% by mid-2025 and reaching around 3% by the end of 2026. This suggests that fixed mortgage rates could fall to about 5% or slightly lower by the end of 2026.

Just three months ago, the RBNZ had indicated it would not cut rates until August 2025 and even considered raising them. The rapid shift in policy is attributed to the RBNZ over-tightening monetary policy after previously loosening it during the pandemic. The economic outlook has worsened, with a projected contraction of 0.6% instead of the previously expected growth.

Despite this, business pricing plans remain high, with a significant percentage of businesses indicating they plan to raise prices. The RBNZ hopes that economic weakness will lead to adjustments in these pricing plans, although recent surveys show an increase in businesses not planning to raise prices.

As borrowers can look forward to lower mortgage rates, the housing market is beginning to show signs of recovery, with increased buyer interest noted in surveys. However, challenges remain, including a 33% increase in property listings compared to last year, job insecurity, declining net migration, and weaknesses in the rental market. While house prices are likely to rise again by year-end, improvements in employment and credit access will take time to materialize.

Source from oneroof.co.nz: https://www.oneroof.co.nz/news/tony-alexander-the-reserve-banks-rate-cut-gamble-why-the-sudden-change-of-heart-46032
The opinions and research contained in this article are provided for information purposes only, are intended to be general in nature, and do not take into account your financial situation or goals.

Stay Connected

More News & Blog

New Zealand Property Market Update: What’s Happening?

Recently, we’ve seen New Zealand house prices stay mostly flat. After a small increase late last year when mortgage rates dropped, prices haven’t moved much, going up by only about 0.1% each month lately.
You might wonder why the market isn’t growing faster, especially since mortgage rates have come down from over 7% to below 5%. Here are a few key reasons:

Understanding New Zealand’s Rental Market Trends: What the Latest Data Shows

Recent data indicates that New Zealand’s rental market is currently experiencing high supply levels, offering favorable conditions for tenants. This increased availability has contributed to slightly lower average rental prices in many areas. Key reasons include properties shifting from short-term to long-term rentals and a slower sales market leading owners to rent out properties instead.

Rental market’s dramatic turn – why landlords are worried

Rents are decreasing in some areas, giving tenants more choices, but landlords are finding it harder to secure good tenants. Now, 35% of landlords are considering selling their properties, and concerns about rising costs for repairs and insurance are growing. Although bank loans are becoming easier to obtain, overall confidence among landlords is declining.