Analysts at Westpac recently cheered their success in predicting New Zealand house price inflation to 7.00% while it was around 1.4% in April 2019. The bank report holds its bullish bias with a 10% target from now. However, it doesn’t expect the burns witnessed in 2016.
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Back in April last year Westpac predicted that New Zealand house price inflation would reach 7% in 2020. At the time house price inflation was running at 1.4% and all other major forecasters were predicting that the market would remain subdued.
If anything, the market has proved slightly stronger than we anticipated. We now expect the current upturn to culminate at a rate of 10% annual house price inflation in the middle of the year.
That said, we are not expecting a repeat of 2016.
We predict that the pace of house price inflation will soon start easing off as rising fixed mortgage rates gradually crimp the market.
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