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What the Future Holds for House Prices in Wellington

With Covid-19 (hopefully) behind us as a country, we look at what the economic experts forecast for house prices in the next 12 months.

Wellington house prices

Historically house prices often fall after economic downturns, and unsurprisingly this is exactly what ANZ expects.

In the economic update released this week ANZ says "our forecasts have not changed since our last ANZ Property Focus [a month ago]. We continue to expect house prices will fall 10-15% over the year, compared with a fall of 8-10% in GDP."

In the update, ANZ believes the fall will be impacted by:

1) Huge uncertainty, which in itself will put off some buyers.

2) Some homeowners will experiencing financial distress and mortgage delinquencies rising, leading to fire sale.

3) For some, it will be difficult to cover their debt-servicing costs, even though interest rates are low.

4) Firm revenue and household income expectations will be lower, while unemployment and business failure rates are expected to increase.

5) Migration is expected to be lower.

6) Expectations that demand for housing will be weak in the future will impact house prices today, over and above changes in supply and demand right now.

7) Households will look to deleverage and be cautious about taking on more debt.

8) Banks are likely to be cautious; credit availability will be hampered by lower asset values and worse income prospects.

With house prices dropping this could be the moment to start growing your portfolio.

However, if you are looking to invest, in their latest weekly commentary Westpac says the interest rate outlook is highly uncertain, and recommends to keep it simple when choosing a mortgage rate, saying "borrowers looking for certainty should aim to fix their mortgage rates, while borrowers who need flexibility should float. Fixed mortgage rates are falling at present, and they probably have further to fall, so those looking to fix may get a lower interest rate if they hold off for a short while. We expect that the RBNZ will lower the OCR to -0.5% next year. If that is correct, then both fixed and floating rates will fall even further next year".

Want to know more? Read about the current market conditions in our latest article Now is a Good Time to Invest in Property.

If you're considering Property Management get in touch with us today. Locally owned and managed, we offer residential property management services across the entire Wellington & Hutt Valley region.

We take care of investments, offering peace of mind and a personal service to investors and tenants alike. Our solutions are backed by industry-leading technology and proven systems that promote both excellent property care and strong investment returns. Taking on all aspects of the landlord’s role, we guide our clients with professional, tailored advice using our extensive experience and insight in the rental market that can only be built over time.

If you would like to chat about the possibility of working together, or to receive a no-obligation, FREE Rental Appraisal get in touch with our team today.

Quinovic Johnsonville | Wellington

Call Jordan Atkinson - 027 297 0873

Quinovic Hutt Valley | Wellington

Call Helen Vance - 027 487 8103

Quinovic Kent Terrace | Wellington

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Quinovic Wellington Property Managers

Article written: May 2020


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