Kiwibank says Aotearoa's housing supply has turned from "famine to feast", as the construction industry builds the largest amount of housing stock since 1991.
In Kiwibank's latest housing market note, senior economist Jeremy Couchman said the building industry has been "really busy" over the past year, despite the raft of disruptions.
"From COVID, despite the lack of materials, and despite the difficulty finding staff, StatsNZ estimates a total of over 41,000 homes were built in the year to June 2022."
And a not-so-demanding housing market could have been expected, with Aotearoa's population growth hitting its lowest rate since the 1980s.
"The seismic shift we've seen in housing supply and demand drove down New Zealand's housing shortage to an estimated 23,000 homes," said Couchman, compared to a shortage of 57,000 homes last year.
The economist expects Aotearoa's housing shortage to disappear over the next 12 months.
And he suspects with a growing plethora of homes ahead, it will encourage a "slow recovery" in house prices.
"After the post-COVID boom of 2021, the housing market is clearly in retreat."
Kiwibank predicts Aotearoa to start accumulating a surplus of homes "at some stage" over the next 12 months while building activity outstrips demand.
Couchman said house sales are down by around a third compared to 12 months ago. With that, house prices have seen a fall in every month of 2022 so far.
The senior economist added Kiwibank has downgraded its house price forecast. Their forecast now predicts house prices to fall by 13 percent by the end of this year, compared to their previous estimate of 10 percent.
Kiwibank forecasts house prices to retreat back to where they sat at the start of 2021.
