NZ: Quiet month for the housing market - Westpac

Dominick Stephens, Research Analyst at Westpac, notes that it was another quiet month for the New Zealand housing market, with prices flat and sales still slow.

Key Quotes

“The housing market continued its run of recent improvement in November. REINZ data, seasonally adjusted by Westpac, registered a 4.1% lift in house sales in November, after a 3.4% lift in October. This takes house sales back to a level last seen in May, although sales are still 9% lower than a year ago. One important thing to note is that REINZ has changed its methodology. This will create a tendency for the number of sales to be understated at first, and then revised higher over time. For example, in October we reported that house sales had risen 1.3%, but that has now been revised to 3.4%. The implication is that house sales may have risen even more than 4.1% in November.” 

“Other indicators have also registered the recent recovery in the housing market. The number of houses available for sale on realestate.co.nz has lifted sharply, and the average time to sell fell.”

“House price behaviour can be divided into two broad regions. House prices in the North of New Zealand (Northland, Auckland, Waikato and Bay of Plenty) continued with their recent trend of recovery. In this part of the country, prices fell in early- to mid-2017 but have mostly been rising since August. In the remainder of New Zealand, monthly price changes were weaker. Wellington registered a 1% seasonally adjusted lift in prices, but many other Central and Southern regions declined in price. In this part of New Zealand, house prices rose very rapidly right through to early 2017, but markets have subsequently slowed sharply.” 

“This pickup in house sales, and the fact that prices are rising again in Northern New Zealand, is no surprise. We noted in the October edition of Home Truths that housing market conditions had been showing signs of improvement since August. With the election out of the way and mortgage rates trickling lower, we said then that we expected a few more months of housing market improvement. We now have the added possibility of a rush to beat restrictions on foreign purchases and tax changes (although house sales were down in Auckland, the most speculative market, suggesting that this is not yet a factor).”

“We expect housing market data to be similarly strong in December and possibly January. But over 2018 we expect New Zealand house prices to fall in response to rising mortgage rates and regulatory changes.”