WELLINGTON (Reuters) – New Zealand’s Reserve Bank Chief Economist Paul Conway said in a speech released on Thursday that the dynamics in the New Zealand housing market are likely to change over the longer term.
“For several decades, we have traded houses among ourselves at ever-increasing prices in the belief that we were creating prosperity,” said Conway. “But the tide may well have turned against housing being a one-way bet for a generation of Kiwis.”
House prices in New Zealand jumped more than 40% in the two years to December 2021. However, a combination of tighter credit, more housing and rising mortgage rates have started to weigh on prices.
Conway said the central bank expects a 15% decline in house prices from their peak.