While there are many divergent opinions on where property values will go in the short to medium term, there is increasing speculation that property prices will ease over the next few years.
Economic forecaster Infometrics are predicting that house prices could fall 12% by 2020 due to a combination of rising interest rates, falling net migration and slowing population growth. In other words, they say, this will be driven by lower demand pressure. Infometrics last year forecast an 11% drop in house prices in the two years to 2019, so this 1% additional drop over the extra year is perhaps an indication of an expected upturn early in the new decade.
Infometrics and most bank economists are expecting the Reserve Bank to keep the official cash rate on hold until mid-2018 though the Reserve Bank itself is forecasting any hike is unlikely to occur until the start of 2020.
Finance Minister, Steven Joyce, has also been warning about the potential for rising rates.
Infometrics chief forecaster, Gareth Kiernan, said Auckland mortgage-holders look particularly vulnerable to even modest rate rises, with a future rise of 1.5-2 percentage points stretching many borrowers.
