Westpac Institutional Bank Team
Westpac Institutional Bank
The Auckland housing market is now suffering a hangover from its recent excesses, food price inflation has proven very low, and world dairy prices are dropping again. This reinforces our view that the Reserve Bank will need to reduce the OCR further than the market is currently expecting.
The message from the REINZ’s October housing report was decisive. Nationwide house sales fell by 7%, the time taken to sell a house lengthened, and the house price index fell 4% – the biggest single-month decline on record going back to 1992. The weakness was especially concentrated in Auckland, with sales down 15% and prices down almost 5% in just one month.
This confirms the idea that some of the recent froth in the Auckland market was driven by investors getting in ahead of the new regulations. From 1 October, all investment properties bought and sold within two years will be subject to income tax on the capital gain. (Previously, the tax hinged on an assessment of the buyer’s intentions, a test which still applies for investment properties sold after two years.) In addition, overseas buyers are now required to register for tax and open a bank account in New Zealand.
At this stage it’s not clear whether these measures will have a sustained dampening effect on the housing market, or to what extent they simply brought purchases forward. But either way, it appears that investors have done their dash for now, and the Auckland housing market is likely to suffer the resulting hangover for at least a few more months.
All information contained on this website is given in good faith and has been derived from sources believed to be accurate. However, the information is selective and neither Westpac nor any other company in the Westpac Group have verified the information, which may not be complete or accurate for your purposes. Those companies make no representation or warranty of any kind as to the accuracy or completeness of the information. It is general information only and should not be considered as a comprehensive statement on any matter and should not be relied upon as such. Neither Westpac nor any other company in the Westpac Group nor any of their directors, employees and associates guarantees the security of this website, gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way including by reason of negligence for, errors in, or omissions from, the information on this website and does not accept any liability for any loss or damage, however caused, as a result of any person relying on any information on the website or being unable to access this website. This disclaimer is subject to any applicable contrary provisions of the Australian Securities and Investments Commission Act and Trade Practices Act.
Recommended Content
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.