NZ housing market set to cool

The report says while housing markets globally have weathered the pandemic remarkably well, New Zealand’s market has been exceptional. Boosted by a strong economic recovery so far, and underpinned by the country’s successful health measures in containing the virus and effective fiscal and monetary policy.

Although this housing boom has similarities with the 2000s, when house prices rose for 26 consecutive quarters – maintaining momentum for such an extended period this time appears unlikely, says ANZ chief economist Sharon Zollner.

“Acute housing unaffordability, high debt levels, macro-prudential policy tightening and credit constraints are likely to slow the rate of housing price inflation, although it could take some time for the market to turn. Until that happens, housing affordability and debt levels could become even more stretched.”

The report says the most striking theme underpinning global housing markets during the pandemic has been the large and synchronised unconventional monetary policy measures used by central banks to support economic recoveries and shore up outlooks for unemployment and inflation.