ASB: House prices won't bounce back til 2029 - Thu 10 Sep

0:00Right, new data about this morning from ASB shows we could be waiting three more years for house prices to rebound back to 2021 levels when they were at their peak. Check it out as it stands. Prices are around 15% below that peak from 2021 that was COVID. That's more like 30% if you take into account inflation. And from here it's a slow burn. ASB says this year's growth will be flat. 2027 predicted at 3.5%, the more standard 5%, not due until the year after that. Ultimately we're not due to return to the peak until late 2029-2030. And that's only a nominal terms. Mark Smith, ASB Senior Economist with me live this morning. Mark, get out. Good morning, Ryan. How are you? Very well, thank you. So 2030 until we get... So that's the nominal terms before we get back to where we were in 2021, right? What about in real terms? What about taking into account inflation? Yeah, obviously it's going to be quite a bit longer than that.

1:01I think the key thing to note though, the 2021 peak was unsustainable. Our analysis looks at three key implementers. One interest rates though are record lows, you know, 2021. That's really helped. Two, population growth was strong. And three, buyers did not have much choice. So our analysis now is saying those things are sort of flipped around. That trend declined and interest rates over the last 30 years. That looks to have run to an end. The other thing also is population growth is likely to be more moderate going forward. Population is getting older and our families are getting smaller. And the other thing also is that buyers now have plenty of choice. There's a lot of construction out there. A lot of townhouses are being built. And it is getting potential buyers a lot of choice. And that's really boosting housing affordability, which is really a key positive for the new feeling of economy going forward. How much of this, because you mentioned all the different factors, how much of this is demand versus supply?

2:01We've had changes to the consenting. We've had changes to intensification. Yeah, I think both are part of the story, but I think the key thing really is the supply side being a lot more responsive to the demand for people. Now, what that is going to do is to make sure that those booms and busts we've seen house price cycles in the past, hopefully will be lower. And a benefit of that will be a more stable economic outlook going forward. And potentially lower interest rate, high, a low interest rate peak going forward as well, as the economy does not overheat as much.