ANZ Economists Predict Flat House Prices for First Half of 2024, with 2% Increase by Year’s End

Date Published: 31 January 2024

Key Facts

• ANZ economists predict that house prices will remain unchanged for the first half of 2024.
• Despite the soft market indicators, house prices are expected to rise in the second half of the year as mortgage interest rates decline.
• The economists forecast a stable sequence of 25 basis point cuts in Official Cash Rate (OCR) starting in August by RBNZ.
• The introduction of new Debt-to-Income (DTI) mortgage lending limits by the RBNZ is not anticipated to significantly affect the market this year.
• The easing of loan-to-value ratio regulations might offer modest support to house prices from the second half of the year.
• ANZ, the largest mortgage lender in New Zealand with over $105 billion exposure suggests a 2% increase in house prices by the end of the year.

Article Summary

The ANZ economists, in their inaugural New Zealand Property Focus Report for 2024, anticipate a stagnation in house prices during the first half of the year due to soft market signals. However, with a potential decline in mortgage interest rates, a rise in house prices is expected in the latter half of the year. Economists Sharon Zollner, Andre Castaing, and David Croy have adjusted the OCR forecast and now expect the Reserve Bank of New Zealand (RBNZ) to implement a regular sequence of 25 basis point OCR reductions commencing from August.

Regardless of the timing of these cuts, officially set to start in August, the economists highlight the equal likelihood of the RBNZ beginning the reductions earlier or later than this proposed date. They also did not exclude the possibility of a rate hike in February, despite it not aligning with their forecast.

Furthermore, the economists also addressed the RBNZ’s new Debt-to-Income (DTI) mortgage lending restrictions, predicting that they are unlikely to cause notable disruption to the housing market this year. However, the easing loan-to-value ratio regulations expected to launch in the latter half of the year could provide slight support to house prices. Amid a soft housing market, the economists had to adjust their house price predictions downward, anticipating house prices to remain steady in the first six months and projecting a 2% increase by year-end.

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