New Zealand’s housing market decline has started to show in the numbers, with average values down across most of the country for three months in a row.
Westpac economists have predicted house prices will fall 10% in 2022, and another 5% in 2023, for a 15% drop in total. This sounds concerning, but should you really worry?
Predictions can be inaccurate
First, it’s worth bearing in mind that housing market predictions are notoriously unreliable. Research has found economic forecasts are often wrong. The economy is extremely complex and people aren’t very good at correctly predicting what will happen. And just like with the weather, short-term forecasting is easier than long-term forecasting.
In a report, Westpac’s Acting Chief Economist Michael Gordon recently commented that 15% would only take us back to 2021. "A 15% drop seems very large compared to history, but to put it into context, it would only take average prices back to where they were at the start of 2021".
How will you be impacted depends on a number of things:
- For homeowners, provided you aren’t forced to sell and you can comfortably pay your loan, you can just sit tight and wait for values to recover.
- For movers, you should be buying and selling in the same market.
- For first-home buyers, falling prices won’t help as much as you might like due to the higher cost of interest.
- For investors, the prices aren’t the problem, it’s the access to lending that will trip you up.
- For developers, this is a major concern if you have properties that will come to market this year
We can help you sort out your finances
Worried about higher loan repayments? Considering buying a rental property while they’re more affordable? Want to know how falling prices might affect you? We can help – just give us a call, drop us a note or send us a text.