ANZ Economists Warn of Potential Downside Risks to Housing Market Amid High Listings and Changing Policies

Date Published: 4 June 2024

Key Facts

• The housing market remains frozen with subdued sales and stagnating prices.
• High property listings as investors struggle with flat to falling prices.
• Bright-line test changes from 1 July may influence more property listings.
• Possible downside risk to ANZ’s forecast of a 3% rise in house prices for 2024.
• Potential early cuts in the Official Cash Rate could ease mortgage rates.
• ANZ optimistic about Reserve Bank cutting the OCR before August next year.

Article Summary

The latest ANZ Property Focus report reveals that the New Zealand housing market is currently stagnant, with both property prices and sales volume showing little movement. The market is characterized by high numbers of property listings, largely due to property investors grappling with the challenge of flat-to-falling prices, creating an environment that favours buyers.

Starting 1 July, changes to the bright-line test—which now applies if a property is sold within two years instead of the previous ten—could lead to an influx of property listings throughout the spring. This adjustment is likely to augment buyer power and potentially pose a risk to ANZ’s modest forecast of a 3% rise in property prices for 2024.

However, the situation isn’t entirely negative. A sluggish housing market might prompt the Reserve Bank to relax and consider reducing the Official Cash Rate (OCR) earlier than their forecasted timeline. Such a reduction could see mortgage rates ease further from their peak levels, providing a bit of relief for current and prospective homeowners.

ANZ remains optimistic about an earlier-than-expected cut to the OCR, which the Reserve Bank had previously planned not to adjust until August of next year. This optimism, combined with the current trends in the housing market, could influence strategic decisions by homeowners, buyers, and investors looking ahead.

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