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House prices to rise 4% - Westpac

House prices are set to rise by 4% this year, boosted by the RBNZ decision in March to cut the OCR, according to Westpac.

Wednesday, April 27th 2011, 12:00AM

by The Landlord

House prices are set to rise by 4% this year, boosted by the RBNZ decision in March to cut the OCR, according to Westpac.

In its April Economic Overview the bank said house prices began to stabilise around October last year, and that the RBNZ rate decision in March "may contribute to further housing market zing."

"We now expect 4% house price growth this year," the bank said.

"I think that house sales are on the rise in most regions except for Christchurch," said Westpac chief economist Dominick Stephens.

While citing interest rates as the main driver for house price rises this year, Stephens said they could also prompt falls further ahead.

"What I think is house prices fell in 2010 due to tax changes that occurred that year and low net migration. Now as interest rates fell through the middle of 2010 and net migration picked up I haven't been surprised to see some stabilisation in the housing market recently. Going forward with the latest drop in mortgage rates, that has prompted us to predict a rise in prices this year. However we do expect mortgage rates to rise and possibly rise quite rapidly over 2012 and 2013 and that will send the housing market back to flat price action. We're forecasting zero house price growth in 2012 and 2013. I certainly wouldn't rule out decline as a possibility."

Stephens also cited the tax changes as a driver behind the rising rents seen in Auckland.

"The quite predictable impact of that has been a drop in house prices because obviously there's less of a tax favourable situation for landowners, but also a rise in rents because there are fewer wiling landlords now. This explains why we went through a period in 2010 where rents were rising and house prices were falling," he said.

« Momentum building in house market, according to ANZThe economists view on the OCR »

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 4.05 4.49
ANZ Special - 3.55 3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.55 3.89
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.97 4.05 4.39
Kiwibank ▼5.15 4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.45 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 ▼4.45 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.39 ▲3.55 3.89
Sovereign 5.30 3.89 4.05 4.39
Sovereign Special - 3.39 3.55 3.89
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.19 4.35 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.39 3.55 3.89
Wairarapa Building Society ▼5.50 ▼3.95 ▼4.05 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.55 3.99
Median 5.34 3.97 4.05 4.39

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