Market momentum tipped to continue
Economists predict that the red-hot housing market will continue in the near-term, with listings not growing fast enough to meet demand.
Wednesday, January 20th 2021, 8:18AM
According to the latest Real Estate Institute data, the days taken to sell a house fell to 31 days in December, compared with a historical average of 39 days.
REINZ data shows the average median house price rose by 19.3% to $749,000 in December, from $628,000 in December 2019, an annual increase of $121,000.
As inventory hits all-time lows, economists at ANZ predict the heat will remain in the housing market in the early part of the year.
"This speaks to further upwards pressure on prices, reinforced by the fact that house price expectations have increased as the housing market has strengthened," the bank's economists said.
The bank said there was FOMO (fear of missing out), which was likely to boost prices further.
"Lower interest rates have played a role in the recent upturn, but this is only part of the story. A speculative dynamic has also contributed, with participants in the market running on the assumption that strong house price gains will continue."
The bank "eventually" expects cooling in the market, brought on by factors including income considerations, weak population growth, strong building levels and affordability/credit constraints.
The reintroduction of loan to value ratio speed limits is likely to dampen house prices. The central bank plans to reinstate LVRs in March.
"This will have some effect in dampening house price inflation (say 1-2 percentage points, according to the RBNZ), though only temporarily, as with previous imposition of such restrictions," ANZ's team said.
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