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New Zealand house sales drop sharply in November, underlying price pressures likely to moderate gradually
New Zealand house sales dropped on a seasonally adjusted basis in November. On a sequential basis, house sales fell 9 percent after rising 27 percent in October and falling 11 percent in September.
The housing market faces several headwinds as well as tailwinds, including mortgage rate changes and policy adjustments – and there is a significant regional divergence. Some volatility was expected in light of this, including payback after October’s large rise, said ANZ in a research report. But if anything, the payback was possibly not as sharp as was expected.
More noise is expected, with the foreign buyer ban taking effect in October and loan-to-value restrictions set to be eased in January, and it will take a while to get a gauge of where sales are settling, stated ANZ. However, at face value, there does appear to be a rebounding underlying trend at play. House sales have risen 5 percent over the past three months, rebounding a little from the weak patch seen through the middle of the year.
Price pressures rose slightly in recent months. The REINZ house price index was up 0.4 percent in November, to be up 1.3 percent over the past three months. But in all, price pressures continue to be contained and continue to ease in annual terms. Annual house price inflation dropped to 3.7 percent year-on-year in November, down from 4.2 percent in September.
“We expect that underlying price pressures will continue to moderate gradually, though the current volatility in sales may cause some bumps”, said ANZ.
Sales dropped both in Auckland and elsewhere, down 12 percent and 7 percent, respectively. Prices rose modestly in Auckland, up 0.3 percent sequentially, but they are nonetheless 0.6 percent down year-on-year and the market has some remaining slack, with days-to-sell below average and lengthening a little this month.
At 11:00 GMT the FxWirePro's Hourly Strength Index of New Zealand Dollar was bearish at -98.7125, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 79.4103. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex