PHOTO: ASB
Expect house prices to fall for the next six months, ASB says – and another economist says its prediction may be too light.
The bank had earlier predicted house price inflation to peak this year at an annual rate of 8.6 per cent in June.
But it said the outbreak of coronavirus had “changed the game”.
House prices would fall 0.5 per cent in the June quarter and 1 per cent in the September quarter, economist Mike Jones said.
On an annual price change basis, he expected growth to slump from 6.5 per cent now to 1.8 per cent by December.
But Brad Olsen, an economist at Infometrics, said the situation could be worse than Jones predicted.
“We’d expect house price falls of between 5 per cent to 10 per cent over the next year, and there’s obviously downside risks to this view as conditions continue to deteriorate further as the pandemic toll continues to grow. With the economy heading into a severe downturn, the stage is set for a housing market fall.”
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