House prices to rise further but only til mortgage rates rise: Westpac
House prices are likely to rise further all year but the strength will only last until mortgage rates start rising, according to Westpac chief economist Dominick Stephens.
Wednesday, July 11th 2012, 12:00AM
by Jenny Ruth
“This month's data was a continuation of recent themes- the market is quite tight by the standards of recent years, although this is nothing compared to the boom years of 2003 to 2007,” Stephens says. He was commenting on figures from the Real Estate Institute of New Zealand (REINZ) which showed national house prices rose to a record in June, up 0.3% from May, and up 5.3% from June last year while sales volumes for a June month were at their highest since 2007.
“Prices are gradually and persistently rising. And the upturn is broadening beyond just Auckland and Christchurch,” Stephens says.
“Given the state of the market and the likelihood that mortgage rates will stay low for a while yet, house prices can be expected to continue rising all year. But we don't expect the current situation to last forever. When mortgage rates rise, the housing market will cool.”
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