House price fall of 4.1pc predicted in new report

A report prepared by business researcher Infometrics is predicting house prices will fall 4.1 per cent by next June, affected by tax changes, cautious households, and the prospect of mortgage rate rises.

The report prepared for QBE LMI, which provides lenders' mortgage insurance, said house price growth was forecast to lift to 10 per cent a year by mid-2013.

That would put house prices 11 per cent above their current level, but after adjusting for inflation real property values were expected to be 1.1 per cent below their June 2010 level, the report said.

It was estimated that changes announced by the Government to the tax treatment of property would reduce house prices by 13 per cent during the next one to two years, compared to what house prices would have done without the changes.

That shift had led to a much less upbeat outlook for the housing market than that presented in the previous report a year ago.

The latest report, published today, said uncertainty about potential policy changes earlier this year had taken the momentum out of the housing market, leaving the market sensitive to other negative factors.

To read the full NZ Herald article, click here

Posted: 12 Aug 2010

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