Long term house price outlook negative: Westpac
Westpac chief economist Dominick Stephens, writing in the bank’s monthly Home Truths report, said the short term outlook on prices was broadly positive, but added the long term picture was decidedly less rosy.
Stephens predicted interest rates would rise rapidly in the early part of the next decade: “We remain convinced that mortgage rates will eventually rise significantly. At that point, we expect the housing market to be severely impacted. But with the Reserve Bank looking very keen to keep the OCR low for some time, this is more a story for the 2020s than the current decade. We are forecasting falling house prices in the early 2020s,” he said.
For now, Stephens expects continued growth as rates are slashed to record lows. October REINZ data showed a showed a 9.3% lift in volumes, seasonally adjusted by Westpac.
Stephens added: “Looking at the three month averages, it is clear that the rate of house price inflation has lifted recently. The acceleration is coming from Auckland and Canterbury, which have shifted from slightly falling to slightly rising house prices, and from Otago and Southland, where house prices are rising fast and accelerating.”
Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.
You will also be able to comment on articles on Good Returns.
![[The Wrap] What the heck is happening at the FMA?](https://goodreturns.publit.io/file/c_fill,w_300,h_200/a6c3bc06-6401-44de-96e2-286c090e132d.jpg)
