House prices to fall for six months: ASB

Amid the deepening COVID-19 crisis, ASB's team of economists have revised their prediction for the housing market. They previously predicted house price inflation to soar to 8.6% in June. 

The coronavirus crisis has taken the heat out of the property market, the economists said. Despite record low interest rates, and an OCR cut to 0.25%, the economy is "headed for recession", senior economist Mike Jones added.

Jones said: "The economic fallout from the coronavirus outbreak will have implications for NZ’s property market. Both demand and supply are likely to take a knock. Demand is likely to tail off first and listings to follow as sellers pull back and await better conditions. The March quarter looks to have been a belter for house price inflation, but we now forecast small outright declines in house prices for the June and September quarters."

Jones believes low interest rates will have a "cushioning effect" on the market, as well as the "starting point of strong excess demand". "But risks are nevertheless to the downside," Jones added.