Westpac’s team of economists have predicted houses prices in New Zealand to increase by 6.3% over 2020 and by another 8% over 2021, according to a recent article on Good Returns.
How is this still possible with the slowdown in net migration?
Despite the closure of New Zealand’s borders which are likely to stay closed for the foreseeable future, we're seeing a lot of Kiwis returning home. We also expect to see a high volume of Kiwis who are already in the country choosing to stay put and entering the housing market while interest rates are so low.
For those that have recently become homeowners, it will be important that house prices don’t drop. Many people have purchased using a low deposit and if house values drop, these purchasers could find themselves in an adverse equity position.
Stable house prices will help with boosting consumer confidence as well as business confidence for those in the construction and housing industry, not to mention stimulating our economy. New Zealand is still in a housing shortage, and it would be key to keep the activity going upwards and catch up before the border is open again.
