PRICE FALLS PREDICTED FROM 2022
Analysts from investment advisory group Jarden expect house prices to fall by 6% next year and 3% in 2023.
Grant Swanepoel and Luan Nguyen gave this prediction ahead of Fletcher Building’s full year’s results last month.
Fletcher Building’s main earnings are from building new houses across the country and the industry is adding 32,000 new homes a year, which is close to capacity. Total industry construction is 4,000 higher when second homes and knockdown rebuilds are added.
The Jarden analysts say house price changes are the key factor influencing house construction, the others being GDP growth, supply-demand balance and Government incentives.
Swanepoel and Nguyen say house price drops will come because new homeowner resources are stretched. This is because mortgage payments – as a percentage of household expenditure – have recently topped 28%, pushing past the 26% 12-year average.
In addition there is limited scope for material rent increases as rent – as a percentage of household expenditure – has hit a new high. Renters have
