Michael Gordon, Research Analyst at Westpac, notes that the NZ’s REINZ house sales report for September was a mixed bag as sales have continued to slide, reaching a fresh six-year low in seasonally adjusted terms. However, the REINZ price index ticked up for the second month in a row, in both Auckland and the rest of the country, he further adds.
“The stabilisation in prices is partly due to a sharp drop in new listings in recent months - property owners don't sell into a falling market if they don't have to. As a result, the stock of unsold homes has actually started falling again, which has alleviated the downward pressure on prices.”
“Another factor contributing to the stabilisation in prices is that mortgage rates are no longer rising, and the most recent changes have actually been down - not by huge amounts, but the change of direction itself is meaningful.”
“Pre-election uncertainty is likely to have depressed housing market activity in September. We wouldn't be surprised to see a short 'relief rally' in the housing market in the next few months - depending on the form of the next government, and any subsequent changes to the tax treatment of property. But any such bounce would be short-lived, with interest rates taking their place again as the dominant driver.”
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