New Zealand REINZ house sales all in May, annual house price growth likely to stay around 3 pct

New Zealand’s REINZ house sales dropped on a seasonally adjusted basis in May by 2.7 percent. On a year-on-year basis, house sales came in at -9.5 percent. House prices rose 0.4 percent in the month nationwide. The data continue to be volatile but May’s data indicate towards some tentative signs of stabilization, after a few subdued months.

House prices rose 0.4 percent in May, whereas the annual house price inflation slowed to 1.9 percent from 2.3 percent. The modest rise in sequential house price inflation was widespread. Auckland saw a rise of 0.4 percent sequentially but is down 3.4 percent in the past year.

In the remainder of New Zealand, house price inflation rose at a more modest rate of 0.2 percent sequentially. The weak monthly print has seen annual house price inflation fall to 6.8 percent year-on-year, implying that recent strength in the regions might be temporary, noted ANZ in a research report. However, over the past three months, price rises have been especially solid in Northland, Manawatu-Whanganui, and Southland.

All regional housing markets outside Auckland and Canterbury continue to be tight, although days to sell did rise in most regions in May. Days to sell in Auckland remained stable at 44, continuing to be above its historical average of 36. Continued slack in Auckland and Canterbury imply that regional divergence will continue.

“From here, recent tailwinds from falls in fixed mortgage rates and the exclusion of a capital gains tax should broadly balance out the headwinds from bank prudence, investor wariness, and affordability constraints. Annual house price growth is expected to remain around 3 percent”, added ANZ.

At 11:00 GMT the FxWirePro's Hourly Strength Index of New Zealand Dollar was highly bearish at -103.574, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 77.9604. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex