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After predictions of a property collapse, the Reserve Bank's latest survey of expectations is now forecasting the house prices index to fall by 1.38% by this time next year.
The forecasts are a lot better than its previous prediction of a 5.49% decrease.
Kiwibank chief economist Jarrod Kerr said post-lockdown activity in the housing market had beaten expectations.
He said returning New Zealanders, coupled with a shorter-than-anticipated lockdown, were playing a key role.
"What we saw leading into lockdown was a lot of Kiwis coming home," Mr Kerr said.
"I mean, where else would you want to be in the world right now? And you know that that still continues to trickle through.
"So more people equal more houses, and the more demand for houses on a stock that isn't increasing as much puts pressure on price."
Mortgage Link Otago adviser Ben Fleming said it was clear the property market in Dunedin had not dropped.
"We are seeing a number of people come back — whether from overseas or certain areas around New Zealand — to the local areas, to the more cheaper areas compared to the bigger cities."
There had not been large numbers coming back from overseas, Mr Fleming said, "but I’m sure we’ll see that pick up."
He said Mortgage Link had a large number of buyers wanting property but stocks were low, with 230 to 250 houses for sale in Dunedin.
It was probably the lowest he had seen it, he said.
"Whether that’s because people aren’t putting their properties on the market or they’re just getting snapped up as quick as they’re coming on but . . . the stocks are low, especially in that first-home $350,000 to $450,000 space."
Stewart Mitchell is a mortgage adviser covering Queenstown and Wanaka. He had been contacted by New Zealanders overseas interested in buying, but few had followed through on the idea yet.
Some expatriate New Zealanders who had been planning to move home in five to 10 years were now bringing that forward to sometime in the next three years, he said.
"It’s happening, for sure.
"How big? I’m not entirely sure."
The latest QV house price index, released last week, shows prices in the southern regions as holding steady.
The median price for Dunedin was at $550,820 — having dropped 0.3% in the last three months.
“There has also been a reasonable level of activity in the upper price bracket which indicates confidence in the market," QV property consultant Tom Patterson said.
Prices in the Queenstown Lakes area fell 4.2% in the last three months — now averaging $1,165,187.
Dark clouds were gathering for Queenstown, though, the QV report said.
Any transtasman bubble was a way off and the wage subsidies coming to an end in September and October could be "realisation time for some property owners".
In Invercargill, prices rose 2% in the last three months to $361,922.
Kiwibank’s Jarrod Kerr said in regional New Zealand the market appeared to be stronger.
"The regions really have surprised us, on the upside.
"We are seeing more people moving into the regions, particularly out of Auckland, and some of the other cities," he said.
— Additional reporting RNZ