BNZ talks down housing market crash

Chief economist Tony Alexander says he doesn’t think economic fundamentals suggest the housing market is going to fall sharply.

“Since late last year our view has been that at some point in the June quarter we would see the housing market starting to flatten out because special factors were driving the strong growth from late last year,” he says in the bulletin.

We are now seeing the housing market flattening out because of the extra 1% rise in interest rates in recent months and deteriorating net migration inflows, he says.

“We don't believe average house prices are likely to fall but the annual rate of inflation is likely to go below 5% over the next 12 months.”