About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Tuesday, November 19th, 7:20AM
rss
Latest Headlines

Investors over-optimistic on price growth - ANZ

Investors house price expectations look overcooked as near-term price decline is baked in, ANZ economists are warning.

Wednesday, October 26th 2016, 12:00PM

by The Landlord

ANZ chief economist Cameron Bagrie

ANZ’s latest Property Focus report is out and it explores the findings of the bank’s 2016 property investors’ survey.

In the survey, investors generally had high expectations for continuing growth in house prices around the country.

At the same time, nearly a third of investors said the new LVR rules had impacted on their strategy over the last 12 months, and half of this group had not bought a property they would otherwise have bought.

Further, nearly 30% of investors said the new LVRs meant they were less likely to buy again over the next year.

ANZ economists, Cameron Bagrie and Philip Borkin, said the bullish house price inflation expectations suggest investors are not extrapolating from how LVR restrictions have affected their own decisions to how they might impact on the broader market.

“Their concern is obviously that restrictions might stop them jumping on the bandwagon, but there’s little concern that the bandwagon might be slowing down or heading for a cliff as a result of those measures.

“As long as net migration stays high and interest rates low, they may well be proven right.”

However, the higher prices go, the harder it is for them to keep going up, the economists warn in the report.

Given Auckland’s stretched affordability ratios, any further house price increases from here ups the ante on a correction to bring affordability metrics back into line, they said.

While impossible to pinpoint a date, they could see an outright fall in house prices due to higher interest rates or an economic recession.

Alternatively, and preferably, they could see a stagnation of house prices while incomes catch up – although low inflation worldwide makes it unlikely that inflation and incomes would do the work.

The economists said that, in the event of a deep recession, the widespread belief that New Zealand (or at least Auckland) house prices never fall too far could be sorely tested.

Owner-occupier property prices might not correct downward too far, but the same cannot be said for land prices, apartments or investment properties, which tend to move in line with the economic cycle.

Other factors also need to be considered in this equation, the economists said.

While there are numerous roadblocks to house-building on a scale that would rapidly dent house price inflation, evidence is now mounting that the new LVRs are cooling the housing market.

The market might still be tight, but house sales are down nearly 10% versus a year ago and, typically, house prices follow sales with a three to six month lag, the economists said.

“House price inflation is already easing and we expect it to continue to do so. Given this, investors’ house price expectations look overcooked.

“That said, previous rounds of LVR restrictions proved to have relatively short-lived impacts on the housing market, so investors may be assuming the same will occur this time.

“But a near-term decline in house price inflation is now baked in, given the recent fall in sales. And given the extreme affordability stretch, yet another surge down the track is far from a given.”

« Market settles into cruise modePace of growth slows as LVRs impact - QV »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • When is a client really a client?
    “And this subtle upgrade to the understanding of a complaint. Which changes the ISO definition from an expression of dissatisfaction...”
    20 hours ago by JPHale
  • When is a client really a client?
    “Just released additional standards from the FMA. Record keeping potentially until 7 years after the death of the life...”
    20 hours ago by JPHale
  • When is a client really a client?
    “@ReganT interesting that the two life advisers involved with the code working group discussion are the ones being argued...”
    1 day ago by JPHale
  • When is a client really a client?
    “In a previous reply I responded to the concept of payment as a trigger. I actually agree it’s not. While we don’t often...”
    2 days ago by regant
  • When is a client really a client?
    “Tash are you being deliberately obtuse? I didnt say you have to keep sending/giving disclosure every year, I said you have...”
    2 days ago by regant
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
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 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
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 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 ▼4.14 ▲4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲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 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
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 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

Last updated: 15 November 2019 4:16pm

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com