Markets with Madison: House price floor still 12 months away - analyst

Downward pressure will remain on house prices for at least six months, and possibly up to 12 months, as higher interest rates take a drawn-out toll on the property market, a Jarden analyst predicts.

Grant Swanepoel told Markets with Madison that while the rate of price declines had slowed recently, he expected prices to keep falling by about 0.5 per cent per month for up to another year, in aggregate, with “no tick upwards” in 2024.

If homeowners held off selling, it would prolong the pain, keeping prices low for between two and three years, Swanepoel said.

“How far they fall, depends on how easily the market’s willing to give up on selling a property.”

He expected the national median house price to fall between 24 and 26 per cent from its peak in November 2021 - it was currently down 15.7 per cent, according to Real Estate Institute data and ASB economics analysis.

Swanepoel said he used the Australian housing market as a guide, which was about nine months ahead of the New Zealand property market because the majority of its mortgages were on floating term rates, compared with about 90 per cent of ours being on fixed terms.

Watch him explain his research on today’s episode of Markets with Madison above.

Meanwhile, stocks were caught in a catch-22 dilemma, with valuations lifting in the past few weeks, ahead of an expected economic slowdown hitting company earnings.

Harbour Asset Management portfolio manager Shane Solly said stock selection was important in this environment, with investors seeking to pick companies that could “tough it out” and avoid those that could be impacted by falling revenue.

He explained why his investment firm was shorting stocks such as ANZ bank in this episode.

Get investment analysis and insights from the experts on Markets with Madison every Monday and Friday on the NZ Herald.

Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.