Not if, but when construction starts falling

ANZ’s latest Property Focus says there simply isn’t enough economic resource available for residential construction to grow much more, and any light at the end of the migration and building materials tunnel seems months away. By then, demand will likely feel different.

ANZ chief economist Sharon Zollner says while the bank’s forecast is for the overall level of residential construction to remain high by historical standards, there is a period of contraction on the cards.

“We have penciled in about a 6% contraction in residential investment activity over next year, which relative to previous cycles can be thought of as a soft landing.

“However, while benign, this is a significantly weaker forecast than the RBNZ’s May Monetary Policy Statement (MPS), and one of the reasons why the OCR will top out at just 3.5% opposed to the near-4% signaled by the RBNZ, and the over 4% peak currently priced in by the market.”