Key Facts:

– Westpac predicts that house prices in New Zealand will rise by 8 percent next year.
– The surge in population is expected to have a significant impact on house prices.
– The new center-right Government’s policies are expected to support the housing market by improving after-tax returns for investors.
– Westpac also predicts that inflation will remain above the Reserve Bank’s target for all of next year.
– Interest rates will continue to rise, which will restrain house prices for now.

Article Summary:

According to Westpac, New Zealand households should expect to remain under pressure as interest rates rise and inflation stays above projections. The surge in population is expected to have a significant impact on house prices, with Westpac predicting an 8 percent increase next year. While higher interest rates are currently restraining house prices, the bank believes that the market has bottomed out and is now turning higher again.

Despite the challenges, there is some positive news. Westpac’s projections suggest that inflation will start to decrease in 2025. However, the country’s economic recovery will depend on how its biggest trading partners, particularly China, fare. New Zealand’s fortunes are closely tied to the broader Asian region, and any downturn in these countries could affect the country’s economy.

In order to get the economy back on track, Westpac expects some hard work domestically. While lower inflation may provide some relief, it will be accompanied by a period of underperformance in the economy. Westpac predicts that unemployment rates will rise slightly in the coming months, with inflation still posing challenges for the general economy and society.

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