ASB expects migration price pressure

Strong net migration will probably push house prices up further over the coming year, ASB says in its latest Quarterly Economic Forecast.

Monday, November 3rd 2014, 12:00AM

by The Landlord

ASB chief economist Nick Tuffley said the bank expected prices to inch up but for the rate of growth to slow steadily over the coming year.

In September, QV reported that prices had increased 6.4% year-on-year nationwide. ASB expects that to slow to just under 3% over 2015.

ASB's report said stronger than expected net migration inflows had supported strong housing demand.

The country’s net gain from permanent and long-term migration increased from 7900 in the June 2013 year to 38,300 in the June 2014 year.

“The turnaround in net migration flows between New Zealand and Australia remains a key driver, as the relatively stronger NZ labour market encourages many New Zealanders to return and fewer to leave. In Auckland, the surge in net migration inflows reflects both a rise in the number of people moving to the region as well as a decline in the number of people leaving," ASB's forecast said.

Auckland’s population grew by 34,000 in the June 2014 year.

ASB said the pressure would continue. “Strong net migration should support a further lift in house prices over the coming year.”

But Tuffley said price inflation would be expected to slow and could be below 1% per annum by 2016.

The report said: “We expect the rate of house price growth will continue to moderate, as the high-LVR restrictions weigh on housing demand, residential construction increases new housing supply and the effects of higher interest rates start to bite. The median number of days taken to sell a house has lengthened in recent months, indicating further easing in house price inflation.”

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