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: If we want to reduce speeding, what do you think actually changes driver behaviour? 🛻🚨🚓
In the Post's article on speeding penalties, the question is asked whether speeding fines are truly about road safety, or are they just a way to boost revenue for the Crown?
What do you think? Should speeding motorists receive speeding fines or demerit points?
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38.3% The sting of a fine (Money talks!)
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61.7% The threat of demerit points (Nobody wants to lose their license!)
💨 Wellington: Is the real summer finally here?
It’s the talk of the town (and every coffee queue): the Wellington "summer" has felt more like a very long, very damp spring! 🌧️ We’ve definitely had our fair share of grey skies and raincoats lately.
In fact, The Post reports that our "pretty average" summer has been tough on the local venues and events that usually thrive under the sun. But don't pack away the sunscreen just yet!
The good news? The next couple of weeks are looking a bit more "settled" (the Wellington word for "not a gale-force downpour"). With autumn officially here, now is the time to squeeze every last drop out of the season! ☀️
Any local hidden spots or activities you’d recommend for a calm Wellington day? Drop them in the comments! 👇
Some Choice News!
DOC is rolling out a new tool to help figure out what to tackle first when it comes to protecting our threatened species and the things putting them at risk.
Why does this matter? As Nikki Macdonald from The Post points out, we’re a country with around 4,400 threatened species. With limited time and funding, conservation has always meant making tough calls about what gets attention first.
For the first time, DOC has put real numbers around what it would take to do everything needed to properly safeguard our unique natural environment. The new BioInvest tool shows the scale of the challenge: 310,177 actions across 28,007 sites.
Now that we can see the full picture, it brings the big question into focus: how much do we, as Kiwis, truly value protecting nature — and what are we prepared to invest to make it happen?
We hope this brings a smile!
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