First-home buyers just can't catch a break.
Predictions house prices would fall 15 to 20 percent have so far proven unfounded, Kiwibank said on Friday, with prices now tipped to fall just 6 percent.
And the country remains about 80,000 houses short of what it needs, with a massive surge in migration thanks to Kiwis coming home from overseas keeping prices afloat.
Kiwibank chief economist Jarrod Kerr told The AM Show on Friday their modelling during the lockdown suggested a price drop of 10 percent.
"We were worried about a larger correction of 15 to 20 percent, because we saw our unemployment rate rising up to 10 - there were downside risks that we could get an unemployment rate closer to 20, 25 percent at that time.
"We've come out of lockdown early, the activity data that we've seen has surprised us... We're now saying the housing market's likely to fall 5 or 6 percent, but we're not so worried about those downside risks we previously flagged."
New Zealand's lockdown successfully ended community transmission of COVID-19, at least for now, and unlike other countries we're mostly free to go about our business as usual. Kerr says demand from buyers unable to purchase homes during the lockdown is just part of what's keeping house prices from collapsing however.
"We have seen some pent-up demand over lockdown and bang, it's hit the market and there are buyers out there willing to get involved. It's a mixture of pent-up demand from not being able to do anything in lockdown, some aggressive banking strategies, record low interest rates, the central bank getting rid of the LVR restrictions for 12 months.
"It's been a bit of a perfect storm if you like, and we've seen a big bounce in first-home buyers and investors."
With early adopters losing the eight-week wage subsidy extension in the coming weeks and applications closing at the end of August, unemployment is expected to worsen in the coming months. Thursday's update, the first in three months, had it at only 4 percent - a number few are taking seriously, with people unable to look for work for much of the June quarter, so not being counted in the official statistics.
"We still are forecasting an unemployment rate of 9 percent," said Kerr.
"The risks around that are better than we previously thought, but once the wage subsidy comes off we do think that there will be another leg higher in the unemployment rate. Forget the rubbish numbers we received yesterday - the unemployment rate is lifting and we think it will continue to lift. Normally when that happens you see a bit of a pullback in asset prices and consumption.
"We hope in six months' time we're wrong again, and get to push our numbers a little higher."
Opening the border to boost the economy, as many high-profile businesspeople and former leaders have suggested in recent days, would be a risky move while the pandemic's still raging overseas, Kerr said.
"You open your borders up and you open that 5 or 6 percent of the economy that's currently being starved of activity - but you're also risking 95 percent of your economy in opening those borders back up again."
Finance Minister Grant Robertson on Thursday pointed out Australia measures its unemployment rate in a similar way to us, and theirs is over 7 percent - suggesting the strict lockdown, though painful, was the right thing to do in terms of the economy.
The median house price in June according to REINZ was $639,000, down from April's peak of $680,000, which may have been influenced by lack of homes actually bought and sold that month - down 78 percent on the year before.