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New Zealand’s house prices accelerate in November, likely to rise further in 2020
New Zealand’s house prices rose in the month of November. Sequentially, house prices rose 1.5 percent in the month, continuing a string of solid monthly prints. On a year-on-year basis, the house prices rose 4.2 percent, accelerating from 3.3 percent.
House price inflation in Auckland outperformed the broader market in November for a change, and annual house price inflation lifted out of negative territory. Auckland house prices rose strongly by 2.5 percent in the month, to be up 0.4 percent over the past year. In the remainder of New Zealand, house price inflation rose 0.7 percent sequentially, bringing the annual house price inflation to 7.7 percent.
While prices came in strong again in November, monthly house sales came in weak. Seasonally adjusted house sales are estimated to have dropped 6 percent sequentially in November, and annual sales growth was widely stable at 1.3 percent year-on-year. Sales dropped in Auckland, down 2 percent sequentially, but dropped more elsewhere, down 5 percent sequentially.
The housing market tightened further in November, slightly tighter than historical norms. Nationwide days to sell dropped to 36 days.
Lower mortgage rates are reigniting the housing market, said ANZ in a research report. House price inflation has risen sharply in recent months and the housing market is tight, but house sales activity continues to be modest.
“Continued strength in house price inflation suggests some upside risk to our forecast for a peak of 5.5 percent y/y in 2020. Looking forward, mixed signals are coming from previous falls in mortgage rates, an uncertain migration impulse, affordability constraints, government policy changes, a softening labour market, and unchanged LVR settings. Nonetheless, evidence is building that the housing market is gaining a second wind, and there’s a real risk that it continues to pick up strongly from here”, added ANZ.