According to the NZHERALD house prices are likely to continue crashing until next year, the Treasury is predicting in today’s Budget.
That means prices should ultimately drop 21 per cent below the peak prices hit in November 2021 before they begin to slowly rebound in mid-2024, Treasury said in its Budget 2023 update.
Those figures include an expected 13 per cent annual drop by June 2023 and then a further 5 per cent annual fall through to June 2024.
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High interest rates and weaker wage growth are behind the falls, Treasury said.
“The Treasury expects higher-for-longer interest rates to continue driving house prices lower,” it said.
Treasury said that – while household incomes will continue growing – Kiwis won’t see their incomes rising as fast as in the last few years due to labour market pressures easing as businesses find it easier to recruit employees and contractors.
“Annual wage growth is expected to fall from 7.3 per cent in early 2023 to a more moderate 4.2 per cent by mid-2027,” Treasury said.
It said tighter bank balances will subsequently lead to “relatively flat” household spending this year as more money goes towards paying the mortgage.
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