Finance Minister Nicola Willis<\/a> on Tuesday said she was interested in \u201cmoderate\u201d house price growth and ensuring there was affordable housing for young New Zealanders. <\/p>\nShe said she understood the views of homeowners who may have taken out loans at the peak of the market, may have negative equity, and are looking forward to some house price growth.<\/p>\n
While officials forecast in May that house prices would increase by 0.3% this year, the HYEFU instead says by year end they will have fallen by 0.7%.<\/p>\n
In its commentary, Treasury said the housing market\u2019s response to falling interest rates had been \u201cmodest to date\u201d due to the high number of houses for sale relative to the buyer demand.<\/p>\n
\u201cAnticipation of further declines in mortgage rates and low net migration inflows have also constrained the housing market,\u201d the HYEFU says.<\/p>\n
\u201cNot all regions have faced the same housing downturn, however, with prices in the South Island around their 2022 peaks. As interest rates and net migration near their cycle lows, the housing market is expected to pick up across the forecast period and will support an increase in household wealth.\u201d<\/p>\n
The Reserve Bank has made nine cuts to the Official Cash Rate since the current Coalition Government came to power.<\/p>\n
Commentary in its latest Monetary Policy Statement, however, gave the impression to some in the market that another cut was unlikely, leading to an increase in wholesale rates. That led some banks to lift their long-term interest rates.<\/p>\n
New Governor Dr Anna Breman suggested financial market condition tightening was \u201cbeyond what is implied by our central projection for the OCR\u201d. This led the swap rates to fall.<\/p>\n
Alongside the decline in house prices, household wealth has fallen, according to Treasury.<\/p>\n
\u201cHousehold net wealth is now around 10 times annual disposable income on average, from around 12 times at the 2021 peak.\u201d<\/p>\n
But household consumption is expected to grow at a \u201cslow pace\u201d over the rest of 2025 before \u201caccelerating\u201d over 2026, in part due to house price growth.<\/p>\n
Due to high interest rates, elevated levels of existing homes for sales, and lower house prices, the demand for new builds has been \u201ccontained\u201d. <\/p>\n
But officials said a recovering housing market will lift residential investment. This is in part down to house prices picking up, lower interest rates, and also more people in the country due to growing net migration – meaning more people wanting homes.<\/p>\n
Jamie Ensor is a senior political reporter in the\u00a0NZ Herald\u00a0press gallery team based at Parliament. He was previously a TV reporter and digital producer in the Newshub press gallery office. He was a finalist this year for Political Journalist of the Year at the Voyager Media Awards.<\/p>\n","protected":false},"excerpt":{"rendered":"Finance Minister Nicola Willis during her HYEFU lockup presentation at the Treasury. Photo \/ Mark Mitchell These house…\n","protected":false},"author":2,"featured_media":185657,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[2246,19330,42790,3225,4765,138,30692,5346,2082,7469,3499,10053,78,5345,700,111,139,1536,69,1523,37005,13910,3333,1517,801,28061,131,20110,61,25187,1530],"class_list":["post-185656","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-2246","tag-19330","tag-42790","tag-according","tag-annual","tag-business","tag-eventually","tag-expected","tag-for","tag-forecasts","tag-growth","tag-house","tag-in","tag-increase","tag-latest","tag-new-zealand","tag-newzealand","tag-next","tag-nz","tag-over","tag-predictions","tag-previously","tag-price","tag-reveals","tag-rising","tag-slower","tag-than","tag-thought","tag-to","tag-treasury","tag-years"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/185656","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=185656"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/185656\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/185657"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=185656"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=185656"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=185656"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}