Westpac says housing market momentum has slowed decidedly since the middle of last year, slashes 2024 house price growth forecast

By Greg Ninness

Westpac has revised down its house price growth forecast for this year, and it's a substantial drop.

In the bank's latest Economic Bulletin, Westpac's Chief Economist Kelly Eckhold said the bank's economists were now expecting house price growth of just 2.1% for 2024, down from their previous forecast of 5.8% growth.

The report said the latest, lower forecast reflected recent trends.

"Since August 2023 we have had a relatively positive view of the house price cycle, in that we have expected house prices to outperform inflation more generally," Eckhold said.

"The key driver of this view has been the historically strong population growth seen since early 2023."

"This population growth, which has coincided with a slowdown in the construction sector, has led to pressure on rental markets that we expected would ultimately push house prices higher with the usual lag."

"House prices did pick up slightly from around May 2023 until the General Election and we did see some modest house price growth in the first quarter of 2024 that was close to expectations. However, momentum in the housing market has decidedly slowed since around the middle of last year," said Eckhold.

"Indeed, growth in house sales has been flagging in recent months, just as we would have expected some resilience in market activity based on our previous house price forecast."

However Westpac's economists are expecting house price growth to pick up to 6% over 2025.

This story was originally published on Interest.co.nz and has been republished here with permission.