ANZ’s economist shave questioned the durability of the housing market’s price increases, considering how stretched values seem to be judging by affordability and debt metrics.
It says New Zealand house prices still look expensive by international standards.
In the bank’s latest Property Focus report, none of its ten gauges that indicate the likely direction of property prices is pointing purely up.
Most are neutral or a mix of up and neutral. Households’ debt servicing is still at a 10-year low but mortgage repayments as a proportion of income have inched up a bit to 40%.
Thereis more demand than supply in many regions and while there has been an increase in the number of building consents being issued, it is still below long-term averages.
There has been a noticeable increase in fixed interest rates and rates of credit growth are still moderate. The bank said fixing lending now could be a good move – and for the first time in a long time is recommending a term of longer than two years.
But the report said the Reserve Bank would likely shy away from lifting the official cash rate as long as possible because the Kiwi dollar is still high. “The RBNZ will be hoping that pending LVR restrictions will put a cap on the housing market. If not, the OCR will be brought into play.”