ANZ: October 2018 Property Focus Report

PHOTO: ANZ

This month we update our views on the outlook for the housing market. A number of offsetting forces are buffeting the market, but the balance of those forces may be changing. Our central view is that the market will see some volatility in coming months, especially in light of policy changes, but that an overarching theme of softness will prevail – with house price inflation expected to be modest. However, we’d emphasise that the outlook is very uncertain at present, and is subject to a number of important risks on both sides. Recent falls in mortgage rates could lend further support to the market, particularly given market tightness in certain regions. But on the other hand, policy changes could see a significant departure of investors from the market, recent softness could see expectations reassessed, and/or the migration outlook could be weaker than expected. On balance, we see risks as tilted to the downside. And in that environment, we expect that the RBNZ will ease loan-to-value restrictions a little at the November FSR. This will provide a boost to the market, but the effect is not expected to be large.