With so many different forces playing out in the market right now - interest rates, inflation, the border reopening - how far might they go?
The expectation held by most of us is that average prices will fall about 10%. That sounds reasonable. But before anyone gets fixated on that number it pays to note something very important.
Economist Tony Alexander says throughout 2022 and 2023, buyers are likely to keep holding the upper hand in negotiations. All one has to do however is either secure a mortgage (not so easy at the moment) or have cash and therefore no need for one in order to take advantage of this market.
There are five strong forces acting to pull back the level of intensity of buyer demand for residential property at the moment. But just because the boom has ended does not mean a crash is on its way.
With investors backing off it is understandable that the pace of increase in house prices has slowed down. In the six months to September 2020, average house prices around New Zealand rose by just 4%, including a 3% fall over the April-May months.