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More house price rises predicted

Friday, September 4th 2009, 1:21PM

by Philip Macalister

Next week we have more of the latest house price data coming out. These numbers are always eagerly awaited, but arguably more so this month.

Everyone wants to know whether the market has bottomed and is going to resume its upward trek or crash again.

As readers will know I have argued in favour of the market at least bottoming or maybe embarking on a slow upward recovery.

Not for one minute do I think we are heading back to the boom times again. Indeed as the lead story in the NZ Property Investor Magazine out next week warns, we are unlikely to see another boom period like the previous one.


The story suggests a back-to-the-future approach maybe the best strategy for investors.

My view continues to be that there are a bunch of factors, such as low interest rates, positive migration etc, which will put a foundation under house prices for now.

However I questioned my view when I looked at this chart prepared by ANZ and presented to the NZ Property Investors Federation conference.

The chart shows that if you believe in cycles and history then there is likely to be a further fall in house prices.

On the upside there are five periods where house prices rose, with the latest from 2002 to 2007 being the longest and strongest.

When house prices fell the downward periods lasted from 10 to 24 quarters and the falls ranged from 5% to 40%.

When you look at the strength of the last boom, prices rose 88% over 24 quarters, but have only fallen 16% over eight quarters then you could quite reasonably be expecting to see a further decline.

My guess though is that in this next round of house data releases we will see further gains. After all that is what the Barfoot and Thompson numbers showed earlier this week.
« Out of the woodsGo pick on someone your own size »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.94 - - -
AIA - Go Home Loans 8.49 6.35 5.79 5.79
ANZ 8.39 ▼6.79 ▼6.29 ▼6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - ▼6.19 ▼5.69 ▼5.69
ASB Bank 8.39 6.35 5.79 5.79
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.90 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - ▼6.19 5.79 5.79
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 8.44 - - -
BNZ - Rapid Repay 8.44 - - -
BNZ - Std 8.44 6.45 5.89 5.79
BNZ - TotalMoney 8.44 - - -
CFML 321 Loans 6.70 - - -
CFML Home Loans 6.95 - - -
CFML Prime Loans 8.75 - - -
CFML Standard Loans 9.70 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.15 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 8.15 6.35 5.79 5.69
Co-operative Bank - Standard 8.15 6.85 6.29 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - ▼6.60 ▼6.10 -
First Credit Union Standard 8.50 ▼7.20 ▼6.70 -
Heartland Bank - Online 7.99 6.69 6.35 6.15
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC ▼7.49 ▼6.15 ▼5.69 ▼5.69
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 8.25 7.19 6.69 6.59
Kiwibank - Offset 8.25 - - -
Kiwibank Special - 6.29 5.79 5.79
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.75 ▼6.69 ▼6.19 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 8.49 ▼7.05 ▼6.39 ▼6.39
SBS Bank Special - ▼6.45 ▼5.79 ▼5.79
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.94 ▼5.45 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
TSB Bank 9.19 ▼7.09 ▼6.59 ▼6.59
TSB Special 8.39 ▼6.29 ▼5.79 ▼5.79
Unity 8.64 ▼6.29 ▼5.79 -
Unity First Home Buyer special - 6.20 - -
Wairarapa Building Society 8.50 6.65 5.99 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 8.44 6.53 6.10 5.79

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