A leading economist says he doesn't expect house prices to fall dramatically, but they will ease.
Talking to The AM Show on Monday, economist Cameron Bagrie said that in the last 12 months, house prices were up 10 percent - a trend that he doesn't think will continue.
"The market's going to ease back and we hope it's just a moderating easing as opposed to something more serious," Bagrie said.
Following a week of mortgage interest rate drops, ending with Kiwibank's record-low rate of 2.65 percent fixed for one year, the cost to borrow money has never been cheaper.
"If you look at debt servicing costs as a share of income, it's down around 7 percent which is 'incredibly supportive'," Bagrie said.
However, in the current environment of rising job-seeker numbers and layoffs, zero migration and flat rents, banks are tightening up on credit availability. He said that "peripheral income", such as from a border or Airbnb, is now considered.
"Mortgage rates are a crutch of support, but the bigger picture is people aren't having jobs," Bagrie added.
REINZ April data showed that the median house price across New Zealand increased to $680,000, up from $580,000 in April 2019, an increase of 17.2 percent.
However, due to the COVID-19 lockdown period, chief executive Bindi Norwell said that the number of properties sold year-on-year had dropped by 78.5 percent, from 6082 to 1305 homes.
“About half were sold in the first 10 days of lockdown (656 properties), followed by just 272 between 11-20 April which included Easter, and then an uplift in the last 10 days of the month with 377 properties sold,” Norwell said.
The low number of sales means that median house price data doesn't yet reflect market prices after the onset of COVID-19.
"The continued listings shortage helped prices hold during April, however, as many of these sales will have been negotiated during March when confidence levels were higher than they are now, it’s important to take this into consideration when looking at the figures,” Norwell added.
Easing of restrictions, including open homes, is expected to bring more activity, with low interest rates and easing house prices making it easier for people in the market to buy.