Westpac's chief economist says recent falls in mortgage rates will boost house prices but warns of rising rates and falling prices from 2020.
In Westpac's latest Home Truths newsletter Stephens wrote that there were clear signs that recent falls in mortgage interest rates had boosted the market.
"It is clear that the rate of house price inflation has lifted recently," he said.
"This acceleration is coming from Auckland and Canterbury, which have shifted from slightly falling to slightly rising house prices, and from Otago and Southland, where house prices are rising fast.
"Meanwhile, the rate of inflation in Wellington and few nearby regions has eased a little."
Stephens said rising sales volumes were a good pointer to the short term outlook for prices and the lift in sales reported by the REINZ in October was a good indicator that house price inflation was set to accelerate.
He picked that house prices could rise 1.5% in the March quarter, mainly driven by lower interest rates.
But he also warned that the lift in the market could be short lived.
"Mortgage interest rates will not keep falling forever," he said.
"Actually, wholesale fixed interest rates have risen quite sharply over the past week or two.
"That should at least arrest the decline in fixed mortgage rates, if not reverse it.
"This is why we think the current housing market upturn will be short-lived.
"We remain convinced that mortgage interest rates will eventually rise significantly.
"At that point, we expect the housing market to be severely impacted.
"But with the Reserve Bank looking to keep the OCR low for some time, this is more a story for the 2020s than the current decade.
"We are forecasting falling house prices in the early 2020s."
Poll: Have you ever had a scary flight?
A plane flying from Christchurch to Wellington on Sunday had smoke billowing out of the engine and upon landing, passengers had to open the emergency exit and jump out. Have you had any scary flying experiences?
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56.6% Yes!
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43.4% No, it's always been smooth flying
ALEXANDER ROAD SPEED LIMIT
Alexander Road in Trentham-Wallaceville of which 50% separates a golf course from a military encampment enclosure and the rest has mostly high fenced off industrial and residential areas on both sides, should have a 70km speed restriction.
Only a short time ago the road had a 80km restriction and was reduced to a pedestrian 50km much to the frustration of many. It has never been an accident prone stretch of road.
The several round-abouts ensure speed is reduced to 30-40km when these things occur.
I recently stayed a few days in Feilding - often given the title of the best town in NZ - and one of the lengthy main streets has a 70km speed restriction despite a predominance of unfenced residential properties on both sides.
LIVE Q&A: Financial well-being with Cat Rikihana
Today (Wednesday) we're having another Neighbourly Q&A session. This time with Cat Rikihana who is a financial mentor, educator and financial capability practitioner at Financial Freedom Trust in the Manawatū.
Cat Rikihana (Ngai Tahu) like many financial mentors around Aotearoa, works with individuals, groups and whānau to successfully navigate financial stress and hardship. Mentors work alongside whānau to increase confidence and skills in personal money management and advocate with and for clients. Cat enjoys delivering online and face-to-face workshops which provide opportunities to normalise money conversations and encourages people to make time to consider their financial well-being.
Cat is also an independent financial well-being coach, educator and indigenous life coach at Restore Wellness Network. She is a published writer and currently in the process of writing her first non-fiction book: 'A financial self-care guide for women in Aotearoa.'
She'd love to answer any questions you may have around your budgeting and spending habits, strategies for saving, retirement planning and debt. (Don't be shy, but be mindful about what you disclose!)
↓ Share your questions now and Cat will reply to your comment below ↓
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