On Thursday, I reported that the Real Estate Institute of New Zealand (REINZ) House Price Index, which adjusts for differences in the mix of properties sold each month, fell by another 0.8% in April, and is now down 17.5% from its November 2021 peak. Separately, AMP Capital chief economist, Shane Oliver, posted the below chart on Twitter showing the extent of the price falls in an historical context:AdvertisementThe 40% run up in prices over the pandemic has been followed by the sharpest price crash in generations. Or, are “more price falls to come after a bounce as rates hikes have their lagged impact on the economy (and hence property demand and supply)”. My view is that New Zealand house prices will probably fall until the October election, after which uncertainty will lift. Thus, when the Reserve Bank does begin to ease, house prices could bounce back hard.
