In last year’s mortgage rate forecast, we predicted rates would drop below 2.00% and stay low, which they did for most of 2021. Our house price prediction wasn't so on the money, but that one comes down to a matter of timing. Here's our latest analysis.
Nationwide average house sale prices rose by 2% in August. This followed a 2.4% rise in July, 1% gain in June, 0.8% rise in May and just a 0.5% rise in April.
Now that we are experiencing lockdown again, can we expect the same things to happen in the residential real estate market and economy as last time? No. There are some key differences between this situation and that of March 2020.
I recently wrote about the end-game being underway for the three decade period of high average house price rises. I still remain of that view, but for now the market retains considerable strength.
There are a growing number of factors in play which suggest that while demand for housing will remain firm, we've entered the end game for the period of strong house price rises well exceeding the rate of growth in household incomes.
Two week’s ago expectations for interest rate changes in New Zealand took a leap up in response to the June quarter inflation number coming in 0.5% higher than anticipated. This is a very rare event and the signal it has sent is that the pace of growth in our economy is too strong for the Reserve Bank to be confident of containing inflation below 3%.
Whenever things like the global pandemic, the 2008-09 Global Financial Crisis, or tax policy alterations happen such as those announced on March 23, most of us can take a view on what the likely impact will be. Sometimes these views can be horribly wrong.