RBNZ poll: 64% of experts say government should do more to slow growth in house prices
Highlights of the news:
- 77% of experts and economists believe OCR will increase in October
- Average prices are expected to increase by $ 45,000 in some areas by the end of 2022
- 3 in 5 say Kiwis should be able to buy a property with just a 5% down payment
As house prices continue to soar, the government should do more to tackle the affordability crisis, the majority of experts say in a new Finder poll.
In this month’s Finder RBNZ official cash rate survey, 13 pundits and economists looked at future OCR moves and other issues relating to the state of New Zealand’s economy. .
The majority of experts surveyed (77%, 10/13) predict that OCR will increase in October to 0.50%.
Angus Kidman, editor-in-chief of Finder in New Zealand, said the rapid rise in house prices was seemingly unstoppable.
“Over the past 12 months, house prices have been skyrocketing, increasing by more than a third. It’s been a boon to home equity, but terrible news for first-time home buyers.
“An increase in the cash rate might slow the train down, but it won’t totally get things under control on its own,” Kidman said.
The general consensus among experts is that an increase in OCR will mean less home sales, higher mortgage and savings rates, and also some support for the exchange rate.
Alfred Guender of the University of Canterbury said: “A small increase would signal that conventional monetary policy is back in the spotlight, albeit at low heat. “
Average prices will increase by $ 45,000 by the end of 2022
Hamilton is expected to experience the strongest percentage price growth by the end of 2022, with an increase of 5.8%, experts say.
Based on REINZ’s current property prices, this would represent an increase of $ 45,240.
Christchurch real estate is expected to rise 5.4%, followed by Tauranga and Wellington (5.2%), Dunedin (5.0%) and Auckland (3.6%).
If the forecast is correct, home values in Wellington would rise by $ 45,000, followed by Auckland to $ 43,200.
Experts share a 5% down payment to buy a property
With house prices on the rise and experts leaning for further appreciation, more than half of respondents * (58%, 7/12) think Kiwis should be able to buy a house with a 5% down payment .
Kiwibank’s Jarrod Kerr said the issue was personal to him.
“I bought my first home with a 5% deposit and mortgage insurance. It put me on the scale, ”Kerr said.
Debbie Roberts of Property Apprentice was in favor of a 5% deposit, but said that right should be reserved for first-time homebuyers only.
Kelvin Davidson, chief property economist at CoreLogic, strongly disagrees with the idea.
“It probably puts this potential owner at too much risk. If prices drop by 5% and [the homeowner] then plunged into negative equity and maybe [that homeowner] also lost a job, the consequences are not great.
Negative sentiment about housing affordability persists
Two-thirds of economists who spoke * (64%, 7/11) believe the government should do more to stem the problem of rising house prices.
Brad Olsen of Infometrics said it was because house prices are rampant.
“Current efforts to change demand have not made enough progress, and the changes are not long-term enough to make a fundamental difference in the growth of house prices over the long term. “
Finder’s Economic Sentiment Tracker assesses expert confidence in 5 key metrics: housing affordability, employment, wage growth, cost of living, and household debt over the past 6 years. next months.
More than half of experts (55%, 6/11) feel negative about both housing affordability and the cost of living, due to rising house prices.
Vaccine passports, an essential tool for economic recovery
With the country’s most populous city being strictly closed during parts of August and September, the majority of experts (60%, 6/10) agree that vaccine passports will be a necessity for the economy to recover.
Kidman said public life will require a new normal.
“Most Kiwis are now used to logging in with the Covid Tracer app on sites. I would expect this to stay in place for the foreseeable future.
When it comes to travel, all respondents expect an Australian travel bubble to return in 2022.
Half of the experts (50%, 5/10) expect it to return in the first quarter of the new year.
For travel beyond Australia, only 1 in 10 people expect international travel to return before April 2022.
* Experts are not required to answer all survey questions
Here’s what our experts have to say about OCR and why:
Sharon Zollner, ANZ (OCR will drop to 0.50%): “Tire pressure.”
Ashley Church, ashleychurch.com
(SOCKET): “The re-emergence of Covid lockdowns appears to have tempered the Reserve Bank’s appetite for an immediate increase – for now. “
Kelvin Davidson, CoreLogic (OCR will drop to 0.50%): “The case is still pretty clear – employment is high and inflation is rising. Better to be one step ahead.”
Michael Reddell, Croaking Cassandra Economic Commentary Blog (OCR will drop to 0.50%):
“The job market has been tight (and will rebound quickly as Covid restrictions ease) and core inflation has finally passed the midpoint target.”
Donal Curtin, Economics New Zealand (OCR will change to 0.50%): “(a) Inflation and labor market data (although difficult to read at the moment) support the passage of a very accommodative monetary policy (b) they were all set to go in August but have had to stop temporarily, now more free to move. “
Brad Olsen, Infometrics (OCR will drop to 0.50%): “Economic pressures are mounting and will not have disappeared even if lockdown 2.0 has hit New Zealand. The labor market remains tight and inflationary pressures are maintained at a higher level. The overall strength of various indicators has already made clear that RBNZ would need to raise interest rates, and Q2 GDP only further reinforces this course of action. “
Jarrod Kerr, Kiwibank (OCR will drop to 0.50%): “The RBNZ has made it clear that it intends to raise the cash rate from October. It will be the start of a long, slow rise to 1.5%, and possibly more.”
Debbie Roberts, Real Estate Apprentice (OCR will drop to 0.50%): “It is very likely that the RBNZ will increase the OCR this month, as it has indicated that it intends to do so during the last MPS in August, until the Delta outbreak. Now that the Most of the country is on Alert Level 2, and Auckland hopes to move to Alert Level 2 in the very near future, there is little reason for the RBNZ to maintain OCR at its current level. “
Dr Oliver Hartwich, The New Zealand Initiative (OCR will increase to 0.50%): “Obviously the RBNZ wants to increase OCR because they said so. The question is whether they now think the time is right when the last time around, just at the start of the new Level 4 lockdown , it wasn’t. I would. Don’t be surprised by a 25 point increase this time – but if that doesn’t happen now, it will almost certainly happen in November. “
Robin Clements, UBS (OCR will drop to 0.50%):
“‘Measures envisaged’ to remove monetary stimulus measures.”
Alfred Guender, University of Canterbury: “The RBNZ ended its monetary stimulus by ending government bond purchases in July. Ultimately, the OCR will be raised to continue the return to normal. However, it is far from certain that the time has come to make such a decision. price fluctuations are due to shortages and bottlenecks in the supply chain, not excess liquidity. “
Mark Holmes, University of Waikato (OCR will change to 0.50%): “Had it not been for the sudden announcement of the alert level in August, the OCR would almost certainly have been increased the last time around. There is now cause to be cautious about the negative economic impact of a strict and prolonged lockdown. ‘Auckland. Concerns, there might still be enough worry and appetite left to push the OCR to the top. “
Michael Gordon, Westpac (OCR will drop to 0.50%): “Demand has rebounded strongly this year and price pressures are mounting. Ultra-low interest rates are no longer appropriate.”
© Scoop Media