RBNZ expects slower house price growth in the current recovery

The Real Estate Institute’s house price index rose more than 40% through the covid period but the index has since dropped about 15% from the peak in November 2021.

RBNZ chief economist Paul Conway told journalists that the central bank thinks house prices are “still a little above what we consider to be sustainable” and the current abundant supply of houses for sale as well as the very cautious attitude towards consumption households are demonstrating should keep house prices in check, at least through this year.

Conway said in the current recovery, lower interest rates, the falling unemployment rate and rising household incomes mean RBNZ is assuming that house price growth will be modest.

The latest monetary policy statement said current low household consumption growth “is consistent with low house price growth constraining household net wealth and low real household income growth.”