An economist from one of New Zealand's biggest banks has questioned the role of the media in reporting on Auckland's housing market, asking if significant coverage of Auckland house price declines could be "a self-fulfilling" prophecy.
BNZ senior economist Craig Ebert was writing ahead of tomorrow's release of Real Estate Institute data for June and posed a question about the effect of the media's role in the market.
He referred to other recent data that showed prices dropping in some Auckland areas.
"The recent decline in Auckland house prices is now getting significant media coverage. This can be self-fulfilling to the extent that folk fearful that a market might correct are more likely to withdraw from it - buyers that is - and sellers will either delist their properties, simply not sell or, if under pressure, accept lower prices than might otherwise be the case," Ebert wrote.
"Certainly, there is already anecdotal evidence of speculators looking to exit the market for fear of getting burned. All of this can lead to a sentiment-driven price correction over and above what market fundamentals might dictate," he wrote.
"We still think genuine excess demand will underwrite the Auckland housing market but, equally, the prospect of a reasonable correction in prices grows by the day. From a
Reserve Bank perspective, housing market developments will certainly play into its lower-for-longer rates strategy," he wrote.
Ebert noted how recent housing market trends had shown prices, generally, to be going sideways in Christchurch, modestly down in Auckland and up almost everywhere
"We expect the REINZ June data to show more of the same. But with Auckland's large weighting, nationwide house price inflation is expected to fall further," he wrote.
ASB chief economist Nick Tuffley said in a Herald video this week that Auckland had become a buyers' market.
Responding to data from Quotable Value and Barfoot & Thompson last week, he said it was clear that there was an overhang of listings in the market.
The market had peaked about a year ago and had been steadily tracking down ever since, Tuffley said.
"What we have seen is just more homes sitting on the market and that number is now about 60 per cent higher than it was a year ago so the demand and supply balance is certainly shifting with more properties available for viewing and giving buyers a lot more choice."