A Kiwi economist is expecting investors to sell off their worst properties during New Zealand's housing frenzy.
Tony Alexander told The AM Show he predicts house prices will continue to rise strongly in 2021, but expects the return of loan-to-value ratio restrictions (LVRs) to impact the market.
"After the next two months, when I think there is still some frenzy left in it, we are going to see a slow down in the rate of price gain," he said on Tuesday. "There's a lot of things that are driving people into a frenzy at the moment, a bit of FOMO (fear of missing out), a lot of people are looking to beat the return of the LVRs, the higher minimum deposits."
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When asked if prices will fall, he said it's "pretty rare".
"Generally it only happens when the country is physically in a recession and that doesn't look likely in the near future. And then for prices to really slow down, to get close to a 0 percent change, you need interest rates to go up."
But he pointed out if they do, it would be a great opportunity for first home buyers to get onto the property ladder.
"When prices fall, all of the first home buyers -who we are concerned about at the moment - they are going to go 'I'm not going to buy because the prices are going to fall'. It's the best opportunity for them to buy but they pull back and wait until everyone else dives in."