The fall of prices in New Zealand is the strongest from the 1990s

In New Zealand, the October price index faced the most serious fall in 30 years. The sales volume was very low. Many expected that housing prices would fall more than economists supposed.

The Real Estate Institute of New Zealand published the data according to which the housing price index was declining for the 11th month in a row, and now fell by 10.9% compared to October of the previous year. The median housing price reduced by 7.9%.

According to economists of Kiwibank, the information about the housing prices was sobering because the decrease in the index was the strongest from the 1990s. They admitted in their note that the growth of interest rates continues to influence the sales volume and housing prices.

During the coronavirus epidemic, the housing prices in the country grew by 40% before reaching the maximum in November of the previous year, and the central bank called it unstable. But because the central bank sharply increased the cash rate, the credit rates also grew, and the prices dropped very quickly. 

Economists think that housing prices will continue to decrease with the expected growth in cash rates. 

Westpac bank declared it awaits house prices to fall 20% compared to their high. The decline was previously expected to be 15%.

In its quarterly economic update Westpac informed that considering the high inflation in the country, the real housing prices should decrease by 30% compared to their maximum of 2021. 

Westpac indicated that such a situation will completely change everything that has been observed for the last years and bring the housing prices back to a pre-COVID level. Many investments in real estate and a decrease in housing prices will shatter their confidence and reduce their expenditures soon.