“Overall, this downturn in property values seems set to run into 2023. But it wouldn’t be a surprise to see a floor for values next year, before some kind of recovery potentially begins in 2024 which would be a swifter recovery timeframe than seen following the GFC,” Davidson said.
House price recovery will happen faster than post-GFC, Corelogic says
Full article from Stuff.co.nz below:
By Susan Edmunds
Homeowners and would-be buyers should expect house prices to recover more quickly from their current downturn than they did after the global financial crisis, Corelogic says.
It has released its property market and economic update for the third quarter.
House prices had fallen 6.3% over the last six months, and the average house price was now $977,158, compared to a peak of $1.043 million, it said.
The last time there was any sizeable drop in house prices was around the time of the global financial crisis.
Between April 2007 and April 2011 the real house price, adjusted for inflation, in New Zealand fell by 15.3%. Housing consents fell by more than 50%.
Prices didn’t start increasing again in earnest until 2013.
CoreLogic property economist Kelvin Davidson said things were different this time.
He said further price falls were likely over the coming months.
The total value of residential real estate had fallen from $1.73 trillion at the peak to $1.62t at the end of September.
Davidson said the “mood on the ground” had started to shift, which could help set the scene for prices to stop falling next year.
“Comparing the current downturn to the GFC, one big wildcard is low unemployment, and nobody’s expecting it to suddenly spike higher. Strong employment should help to keep a floor under home values, and be the difference between a correction and a more serious slump,” he said.
“In a wider context, the economy also continues to perform fairly well. Recession was avoided in the second quarter of the year and most indicators point to further economic growth in the near term, another variable to the GFC.”
He said the peak had not been reached for mortgages yet.
Activity levels were as weak as they had been in a decade, he said.
“Days to sell has also risen, as vendors aren’t generally being forced to sell and buyers aren’t in any rush either – knowing that they have the pricing power and plenty of choice amongst the existing stock of listings, which has begun the seasonal spring rise,” he said.
“On the plus side, easing of the CCCFA rules may allow more people to access the market who might otherwise have been turned down for a loan.
“Overall, this downturn in property values seems set to run into 2023. But it wouldn’t be a surprise to see a floor for values next year, before some kind of recovery potentially begins in 2024 which would be a swifter recovery timeframe than seen following the GFC,” Davidson said.
