housing frenzy

PHOTO: Tony Alexander spoke the The AM Show about his predictions for housing in 2021. Credits: Image – Getty, The AM Show

A Kiwi economist is expecting investors to sell off their worst properties during New Zealand’s housing frenzy.

Tony Alexander told The AM Show he predicts house prices will continue to rise strongly in 2021, but expects the return of loan-to-value ratio restrictions (LVRs) to impact the market.

“After the next two months, when I think there is still some frenzy left in it, we are going to see a slow down in the rate of price gain,” he said on Tuesday. “There’s a lot of things that are driving people into a frenzy at the moment, a bit of FOMO (fear of missing out), a lot of people are looking to beat the return of the LVRs, the higher minimum deposits.”

New Zealand recorded an 11 percent increase in house prices over 2020, with some Westpac economists forecasting a rise of 15 percent in 2021.

But Alexander said he doesn’t think the skyrocketing prices will last.