Home News What will the housing market look like in November 2023? Three experts weigh in

What will the housing market look like in November 2023? Three experts weigh in

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The New Zealand housing market looks very different now than it did a year ago.

According to Real Estate Institute data, prices effectively peaked in November 2021, but have since fallen by just under 13%.

Interest rates continue to rise from 4.12% a year ago to 5.72% last month, according to the Reserve Bank.

Reserve Bank Governor Adrian Orr I have a hard time pointing out that things will get worse this week before they get better. He said the official discount rate would likely need him to peak at 5.5% and the country would likely enter a year-long recession in the middle of next year.

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So what will house prices look like this time next year? We asked three experts.

Tony Alexander, Independent Economist

Tony Alexander believes the fate of the housing market could change by this time next year.

“We expect improvement to be underway in terms of house prices rising slightly, investors returning to the market in anticipation of government change, and first-time homebuyers probably a little stronger than they are now. I’m here.

“I don’t buy into scenarios where everything is doomed and bleak and something horrible just disappears.”

He said the official cash rate (OCR) increase this week has already been largely priced in, so the focus is on what Orr said.

“It was all about trying to scare people and talk about the recession.

“For me, the next big thing is not when interest rates actually go up, but when people get to understand the worst case scenario. It looks like it’s going to drop again in late 2023 or 2024, even if you’re paying for ‘you can say ‘and live with it’. This brings buyers back into the market. As the months go by, the line of buyers gets a little longer and a little longer.

“I’m trying to get people to think about that, not just the immediate concerns that the Reserve Bank is trying to raise there.

“The OCR is going to be 5.5%, but we’re going to get there in four months and a week. It’s not pretty, but it’s on track and there are improvements.”

Sales rates are likely to slow next year, according to Kelvin Davidson.

Kathryn George/staff

Sales rates are likely to slow next year, according to Kelvin Davidson.

CoreLogic Real Estate Economist Kelvin Davidson

Kelvin Davidson said this week’s update from the Reserve Bank has changed his view of what will happen at the end of next year.

“For a while, sales activity started picking up and you could have said that if house prices weren’t necessarily going up, at least they wouldn’t go down.”

He said it was more likely to happen in 2024 than in 2023.

“We recognize the risk that the Reserve Bank may bet big and there may be elements that threaten inflation without realizing it. [the forecast rate hikes] – Monetary policy has lagged behind and has already taken a big hit. Everyone hits in unison early next year, so why raise the OCR that much? It’s still possible that property sales pick up again at the end of next year and prices stay flat. But right now, the core scenario is that 2023 will also be a fairly quiet year for sales. ”

He said home sales this year are likely to be 67,000 or 68,000, the lowest number since 2010. Next year, that number is likely to remain below 70,000 for him.

Prices were almost half the drop, he said. “It could take another nine or 10 months. I have.”

He said one of the positives from the Reserve Bank this week is that unemployment will rise mainly due to an increase in the labor force rather than unemployment.

“It’s not that bad of an outcome for real estate in the sense that people won’t lose their jobs and can probably pay their mortgages and move around if they want… but I’m not sugarcoating it.” No. This is definitely a serious real estate downturn, and there will be more, for sure.”

Miles Workman, ANZ Senior Economist

Miles Workman said ANZ expects house prices to fall 27% from peak to trough, or 18% in nominal terms, adjusted for wage growth.

“Needless to say, this week’s developments pose new downside risks to this forecast.”

He said the Reserve Bank has shown how serious it is about lowering inflation, so it will look to potential “shock value” in the housing market.

“Housing often seems to stray from the ‘basic’ in one direction or another as ‘animal spirits’ do their job. Perhaps now FOHIR (fear of rising interest rates) will manifest itself in a sharper recession than we all expected.Importantly, the driving force behind this housing outcome is , are notoriously difficult to identify in forecasts, which is part of the reason why economists don’t have a good track record at predicting house prices.”

He said ANZ had previously expected house prices to find a bottom in mid-2023, but that could now be delayed as the OCR could rise longer than previously expected. .

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