Keep an eye on the NZ housing market - ANZ

Analysts at ANZ explained that although the housing market has shown more signs of life of late, we have not changed our overall views of where it goes from here. 

Key Quotes:

"A number of opposing forces are likely to see prices effectively stay ‘on ice’ for the foreseeable future. 

All else being equal, we expect this to be a headwind for consumption growth going forward, although perhaps to a lesser extent than history would suggest, given that the softer housing market has not been driven by a turn in the interest rate cycle, but rather by a more restrictive credit landscape, including macro-prudential policy. 

Nevertheless, with the household saving rate having deteriorated over recent years (to an unsustainable level in our view), weaker house price performance is expected to see households look to rebuild precautionary saving, and this will be a headwind for overall activity growth. In data this week, the retail trade survey for Q4 is likely to show decent spending growth (perhaps the last hurrah?), while we expect global dairy prices to take a breather."