Westpac's chief economist says recent falls in mortgage rates will boost house prices but warns of rising rates and falling prices from 2020.
In Westpac's latest Home Truths newsletter Stephens wrote that there were clear signs that recent falls in mortgage interest rates had boosted the market.
"It is clear that the rate of house price inflation has lifted recently," he said.
"This acceleration is coming from Auckland and Canterbury, which have shifted from slightly falling to slightly rising house prices, and from Otago and Southland, where house prices are rising fast.
"Meanwhile, the rate of inflation in Wellington and few nearby regions has eased a little."
Stephens said rising sales volumes were a good pointer to the short term outlook for prices and the lift in sales reported by the REINZ in October was a good indicator that house price inflation was set to accelerate.
He picked that house prices could rise 1.5% in the March quarter, mainly driven by lower interest rates.
But he also warned that the lift in the market could be short lived.
"Mortgage interest rates will not keep falling forever," he said.
"Actually, wholesale fixed interest rates have risen quite sharply over the past week or two.
"That should at least arrest the decline in fixed mortgage rates, if not reverse it.
"This is why we think the current housing market upturn will be short-lived.
"We remain convinced that mortgage interest rates will eventually rise significantly.
"At that point, we expect the housing market to be severely impacted.
"But with the Reserve Bank looking to keep the OCR low for some time, this is more a story for the 2020s than the current decade.
"We are forecasting falling house prices in the early 2020s."
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Advice please, declined house insurance cover
Looking for advice please. Has anyone had any issues reinsuring their homes. Our current house insurance went up by 11.5%, so I decided to get another quote. At the end of a very long phone with Tower, they declined to insurance us, saying our property is a landslide risk. I'm on Wyndham Road in Pinehaven. While the house is up off the street, the house itself and backyard are on the flat part of our section. Now - in the interest of full disclosure - I'm going to have to tell our current insurer too. I've rung the Council to see if they've updated their hazards mapping - and they said the only update has been to the Pinehaven Overflow. Have lived in this house since 2003, and insurance has never been an issue till now. TIA
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