ANZ’s economists have labelled the New Zealand property market “a deflated bouncy castle”.
In their latest Property Focus report, issued on Thursday, they said it was time for a “reality check” as house prices tumbled from the “ridiculously” and “giddying” high starting point of late-2021.
They also profiled a number of risks that could send prices lower, or even into a crash.
These included a global shock leading to rising unemployment, continued negative net migration as more Kiwis left, inflation continuing longer than expected, and high wage growth – the final two of which would likely lead to more interest rate hikes.
The greatest risk, report author senior economist Miles Workman wrote, was rising unemployment, which could prove to be “toxic” for the housing market.
Most economists are currently holding up low unemployment as a saving grace for the market.
They say that as long as people have jobs and employers are desperate for people, mortgages will keep being paid, there will be few forced sales, and any kind of crash will be avoided.
The ANZ report strikes a less reassuring tone.