The latest REINZ housing report showed that the New Zealand housing market remains subdued as house sales fell by another 0.8% in August (adjusted for normal seasonal trends), leaving them down 22% over the past year, notes Satish Ranchhod, Senior Economist at Westpac.
“The level of sales is at the lowest level we’ve seen in three years.”
“House prices eked out a small gain, with the REINZ house price index rising by 0.4% for the month. House price growth has essentially stalled since the start of this year. Prices in Auckland nudged up 0.7% in August, but remain 3% below their recent peak. Price growth in other regions has also slowed, but more modestly.”
“The slowdown in the housing market has been larger and more persistent than we’ve observed in the past when loan-to-value limits have been tightened (or when buyers may have been nervous about an election outcome). We have long emphasised the role of interest rates in determining house prices; the rise in mortgage rates over the past year, following two years of steady declines, appears to have had a significant dampening effect on the housing market.”
“We can’t rule out a temporary post-election pickup in the housing market. But with sales continuing to decline, days-to-sell on the rise and the inventory of unsold homes increasing, we expect that housing price growth will remain subdued for some time yet.”
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