"Incredibly high" house prices to "press higher" over 2021
Other banks are expected to follow Westpac’s new 2.29% mortgage rate, and ASB economist Chris Tennent-Brown says he’s expecting already high prices nationwide to “press a bit higher” over the next six to 12 months.
He says that with ANZ, BNZ and ASB all offering a one-year rate not too far behind that of Westpac – 2.49% – and Heartland Bank sitting at 1.99%, the low interest rate environment will almost certainly maintain ‘buoyancy’ in the housing market.
“We have already seen some pretty big movements in house prices and this low interest rate environment is providing a backdrop for these prices to at least be maintained, if not press a bit higher. It is all part of this pretty buoyant market.”
Commenting on the ‘relentless’ rise in house prices, CoreLogic’s Nick Goodall said that 2021 is in danger of bringing ‘outright unaffordability’ for first home buyers. He says both sellers and buyers will need to ‘adjust their expectations’ once this happens, but, currently, that point looks a long way off.
“Later in 2021, the potential flow-on impact of such strong growth will eventually be outright unaffordability reducing the pool of buyers able to borrow enough to participate in the market,” Goodall said.
“There will need to be an adjustment of expectations from both vendors and buyers then, but with a full pipeline of buyers right now, and a lack of attractive wealth generating alternatives out there, this point looks some way off.”
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