It’s a large difference. Typically it takes around 12 months for high immigration to impact property prices.
According to Westpac, the increase on its own could push house prices up 15-20%.
But the property market is still facing headwinds. Next year the banks will still have high interest rates and strict lending criteria. Many forecasters also expect unemployment to increase. All these factors work against increasing property prices.
That’s how Westpac gets it down to 7.7%.
ASB has been looking at the same migration data, but interprets it differently. They think high interest rates and tight bank criteria will keep house prices in check.
The other main difference is when the banks released their forecasts.
ASB released in August; Westpac was in November. This means Westpac had 3 more months of data to look at.
At the time, ASB was making their predictions based off 2 month’s worth of house price growth.
Today, house prices are up 3.8% – 5 consecutive months of increases. That’s an average of 0.75% per month on an annual basis that’s over 9%.
That starts to make Westpac’s 7.7% prediction look realistic.
But a word of caution when looking at these forecasts. They consider house prices at the national level. The national house price is an average of what’s going on around the country. So Auckland property prices could go up quickly, while some other areas remain flat. The national average can make it look like property prices are going up everywhere, when they’re not.
All major banks predict property price increases, but that doesn’t mean house values will go up in your area.
For example, NZ house prices bottomed out in May 2023. But in the latest data to October 2023, prices in Whangarei were still falling and yet to bottom out.
That’s why it’s important to ask how forecasters came to their conclusions. Net migration is the major factor in most house price forecasts so you need to ask yourself, “Where are most of these migrants settling?”
Places where most migrants settle are likely get some of the strongest price growth.
New arrivals tend to settle in the main centres; a disproportionate number of those stay in Auckland.
Major cities like Auckland, Christchurch and Wellington will likely see house prices increase the fastest.