House prices are expected to fall after government initiatives on the housing market. House prices in NZ have skyrocketed since last year.
As per the latest figures of REINZ, HPI rose 24% YOY to 3,756 in March with a national median house price of $826,300 compared to $665,000 the previous year. Auckland's median house price rose by 18.5% to more than $1.1 million in the month.
The NZ government announced many measures to alleviate soaring housing market in the last week of March. Some of the initiatives included extending the bright-line test to 10 years and phasing out interest deductibility.
As per RBNZ’s latest monetary policy meet, monetary policy committee members noted that low interest rates made servicing loans easier and pushed house prices higher. The broader impact of low interest rates is that it makes the needed deposit to buy a house larger.
However, the rise in house prices is expected to be slowed by the government's recent housing policies although the scale of the impact and consequences for CPI and employment would take time to assess.