New Zealand housing market remains subdued in August; house price growth to remain soft: Westpac Research

The latest REINZ housing report for the month of August showed that New Zealand’s housing market remains subdued. House sales fell by another 0.8 percent in August (adjusted for normal seasonal trends), leaving them down 22 percent over the past year.

House prices eked out a small gain, with the REINZ house price index rising by 0.4 percent for the month. House price growth has essentially stalled since the start of this year. Prices in Auckland nudged up 0.7 percent in August, but remained 3 percent 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," Westpac commented in its latest research report.

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