PHOTO: Wellington, NZ. FILE
The anticipation of potential public sector job cuts is already influencing Wellington‘s real estate market, and there are concerns that the capital might lag in the upcoming price recovery. ANZ has adjusted its housing price forecast for the year, projecting a 0.4% decline in 2023 instead of the previously expected 0.2% rise. The bank attributed this revision to weaker-than-expected house price growth in October, with indicators like sales and new listings indicating further softness ahead.
Special Offer – Profile your business online for 12 months | www.propertynoise.co.nz EST. 2015
ANZ economists observed a decline in house prices across major markets in October, posing the question of whether this signaled a continuation of the 2022 trend of a weakening housing market or was tied to political uncertainty. While new listings slightly exceeded year-ago levels, the increased supply could impede significant price increases in the coming months. Wellington, in particular, faced additional challenges, with house sales hitting multi-decade lows, a 2% month-on-month drop in prices, and a five-day increase in days to sell.
The economists highlighted Wellington’s vulnerability, citing its reliance on demand from the public service. Some government ministries had initiated downsizing to meet the outgoing government’s baseline cuts, contributing to potential negative effects on the housing market. Despite uncertainties in population growth data, there were concerns that Wellington’s labor market, already starting from a tighter point than the rest of New Zealand, could experience a sharp softening.
Economist Andre Castaing noted slower population growth in Wellington compared to the rest of the country and predicted a potential widening of this gap due to the new government’s public sector job cuts. Limited housing supply was identified as a factor that could eventually stabilize Wellington’s housing market, but the impact might be delayed given the time required for construction.
Gareth Kiernan, chief forecaster at Infometrics, pointed out historical performance gaps between Wellington’s housing market under Labour-led and National-led governments. The current government’s stance on public sector employment might exacerbate these differences, potentially leading to Wellington’s housing market being left behind while other regions experience growth.
ANZ economists acknowledged that national house prices were still significantly below their peak and might take years to recover. However, they noted that a period of weak house prices coupled with robust wage growth had improved affordability to pre-pandemic levels. Despite characterizing house prices as not ‘affordable,’ they emphasized the positive impact of strong wage growth on offsetting some challenges.
Recent data from Trade Me indicated a 2.4% month-on-month increase in average asking prices across the country, with regions like Hawke’s Bay, Auckland, and Marlborough leading the surge.
SOURCE: STUFF