PHOTO: House prices. GETTY
Housing prices are on the rise, but this upward trend may not extend beyond the next year.
According to ANZ’s latest Property Focus report, the median house price in the country has increased by 0.7 percent in each of the last three months. The bank’s economists have revised their projections, expecting prices to climb by 4 percent in the latter half of this year.
This surge in prices can be attributed to first-time homebuyers entering the market and the arrival of nearly 100,000 migrants in the past year.
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ANZ economist Andre Castaing stated, “House prices have consistently risen, with a 0.7 percent increase in each of the last three months. When annualized, this amounts to a robust 8.7 percent per annum.”
However, despite the heating market, the time taken to sell properties remains higher than the long-term average, and sales still lag behind historical figures. Castaing noted, “It’s a bit of a stretch to label the current market as ‘hot’.”
Despite the improved forecast of a 4 percent increase in house prices, up from the previous prediction of 3 percent, ANZ economist Andre Castaing does not anticipate a sustained upward trajectory. He explained, “We believe that the Reserve Bank will need to raise interest rates, either by keeping them at their current levels for an extended period or by increasing them further. These higher mortgage rates will have a dampening effect on the rate of house price growth, leading to a slowdown towards the end of next year.”
Castaing also suggested that if immigration slows down, the momentum in house prices may soften more rapidly.