Bouncy castle deflating

The bank’s latest Property Focus says prices are down a bit more, the data suggest there are further declines to come, and there is no convincing signal prices are finding a floor.

ANZ chief economist Sharon Zollner does expect some form of floor given the tight labour market and robust household income growth. “However, at this stage it’s fair to say the floor is more like that of a deflated bouncy castle than solid concrete.”

She says the risks around net migration also feel skewed to the downside, a potential negative for housing demand. And hard-landing risks for the broader economy remain highly pertinent. “Even 8% off their peak, house prices remain highly vulnerable should we see a sharp rise in unemployment.”

Reflection