The Infometrics modelling anticipates sales activity in Auckland being reduced by between 8 and 14 percent over the same period, which should slow house price inflation in that city by between two and four percentage points. The economic consultancy said that won't be enough to improve housing affordability with Quotable Value figures out today showing property values rose at a 16 percent pace in Auckland.
"As with the previous LVR changes, we expect the effects on the housing market to only be temporary," Infometrics chief forecaster Gareth Kiernan said. "In Auckland, in particular, the demand and supply equation remains profoundly out of balance, and further significant and sustained increases in residential building activity are necessary before house price inflation can be brought under control."
Infometrics said the housing market outside Auckland doesn't have the same undersupply issues so isn't as resilient to policy changes, but fundamental drivers such as population growth means housing market activity should stay strong once the new LVRs "have worked their way through the system."
See the recent surge in NZ property prices from the Real Estate Institute of NZ (REINZ) here: