Brad Olsen: Infometrics Principal Economist on average house prices falling

The cost of New Zealand’s homes are beginning to fall. 

The latest QV Quarterly data reveals that average prices have fallen by 0.5% over the three months to July. 

Auckland is down by 1.2%, while Queenstown and Invercargill continue to rise by 2.4% and 1.2% respectively. 

The average price is now 13.1% cheaper than the artificial Covid peak in 2021. 

Brad Olsen, Infometrics’ Principal Economist, told Mike Hosking with about half a year’s worth of sales currently on the market, there’s a lot of supply. 

On the flip side, he says there aren’t as many buyers, with employment uncertainty and the hit many people’s KiwiSavers took earlier in the year influencing buying habits. 

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Episode Transcript

Speaker 1 (00:00):
Housing update new QB data this morning, average values dipping
a half percent over the last three months to July.
Auckland down one point two, Queenstown though up two point four.
Come on and end of a car Girl up one
point two. Key here is the average price is down
thirteen percent on the COVID peak of twenty twenty one.
Brad Olsen, principal economist. Of course, that to infometrics and.

Speaker 2 (00:18):
Is with us Brad morning, good morning.

Speaker 1 (00:21):
You crunch down through the building boom, the consents that
we had a couple of years back in all the
houses on the market now versus the mood of the nation.
Do we know what's driving what's going on currently?

Speaker 2 (00:34):
I think there's a few factors coming through, Mike. I mean,
obviously there's a lot of people that have still got
their houses on the market that haven't yet sold. Is
about half a year's worth of sales sort of currently
sitting out there, So a lot of supply. You know,
some people obviously not keen or not able to pay
the mortgage quite as much, or moving around for a
variety of other factors. The real challenge at the moment

(00:56):
is that there just aren't as many buyers out there.
People got hit earlier this year when their deposits you
know that were in their Kiwi savers or in their
Chares's account and similar to a dip from the market disruptions.
At the same time, of course, everyone's worried about their
job and employment, so people not going out and buying
at quite the same level as before. That means that

(01:17):
with a lot more supply not quite as much demand,
those prices continue to come under pressure.

Speaker 1 (01:22):
Do you believe the interest rate argument? As they come down,
continue to come down. A and Z moved yesterday. I'm
assuming the others will move shortly. RB moves next week.
This is the fizz we need.

Speaker 2 (01:34):
Well, I think you'll see movement to a degree, I'm
not convinced it's necessarily the fizz we need. From two
points of view, One, I'd be worried if New Zealand's
economy really was it was the only thing that could
move us was getting the housing market cranking again and
locking people out of houses in the future. But two,
and probably more importantly, how much of an interest rate

(01:54):
decrease you have you already seen in the economy and
there hasn't really been any response. Yes, lower interest rates
I think will support a few more people, will support
a bit more lending. But I really don't see the
conditions for house prices to just zoom away going forward.
And I actually think that's probably a good, painful but
good lesson for the New Zealand economy.

Speaker 1 (02:14):
I assume you read Kelly Echold's piece yesterday as I did.
He's bullish on housing next year. What's he see what's
happening there?

Speaker 2 (02:21):
Well, I mean that's probably where Kelly and I diverge
a little bit, because I see the likes of that
highest supply that you've already got of existing homes on
the market, the fact that you've also got a whole
lot of those new builds from the last couple of
years they are only at the moment hitting the market.
But probably most importantly, the big sort of question, and
this is where, again you know that there's a lot
of economist views out there is migration. How many people

(02:44):
are we going to be having coming into the country.
What sort of population population growth have we got? Because
if that population growth does pick up, then yes, there's
probably a bit more housing activity and higher house prices.
If it doesn't, you don't have that high level of demand.
You might well have the slowest population growth effectively since
before since the early sort of twenty tens GFC sort

(03:04):
of period. If that's the case, I just don't see
the conditions for housing to g up quite as much.

Speaker 1 (03:09):
You're a good bloke. Always good to have you on
the program, Brad Olson, the Infimetrics principal economists.

Speaker 2 (03:13):
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