NZ: Housing market is cooling gradually - ANZ

In view of the Phil Borkin, Senior Economist at ANZ, a gradual cooling in momentum is still their main takeaway from the latest REINZ housing data market figures of New Zealand for December 2016.

Key Quotes

“In December, turnover dipped, days to sell lengthened and house prices were largely unchanged. The market is certainly not weak, but it has cooled from its dizzy mid-2016 heights. While an ongoing housing shortage needs to be kept in mind and will support the downside, we believe prudential restrictions and recent mortgage rate increases will ensure cooler momentum persists.” 

“Key results

• Seasonally adjusted national sales volumes dipped in December, falling 0.9% m/m. While there has been some monthly volatility, this continues a cooling trend evident since around April 2016. As a share of the housing stock, we estimate 3-month average turnover has now fallen to its lowest level since late 2014. 
• The median time to sell ticked a little higher, lifting 0.3 days to 34.3 days. While this is not quite its recent high of 34.6 days seen in October, it is still well up from its mid-2016 lows of close to 30 days. 
• House price growth momentum has also softened. Our preferred measure of house prices – the REINZ Stratified House Price Index – was largely unchanged in the month (+0.4% m/m). While this is the fourth consecutive monthly increase, and annual growth remains elevated (at 14% y/y), the pace of price growth has certainly slowed vis-à-vis mid2016. In three-month annualised terms, prices are running at just 4.3%, which is down from close to 25% in the middle of 2016.
• From a regional perspective, the picture is mixed. Auckland sales volumes have fallen for eight consecutive months (to be down 23% from their high), although sales are down elsewhere too (17% over the same period). More modest price growth has been a relatively broad-based story, although Auckland and Christchurch are underperforming, with Wellington and other South Island regions leading the way.”