NZ: Acceleration in house price inflation – Westpac

Dominick Stephens, chief economist at Westpac, notes that the New Zealand’s house price inflation accelerated over the New Year period, as predicted by Home Truths as the latest batch of monthly housing market data, covering February, showed that nationwide seasonally adjusted prices rose 0.7%, the fastest increase since November 2017.

Key Quotes

“Prices have been volatile month to month, but the overall rate of price increase this summer was stronger than last summer.”

“Prices may have been strong overall, but market turnover has been dropping away for a while, and the latest monthly data registered a further drop. Seasonally adjusted house sales in February were 5.8% lower than in January. REINZ always understates the number of sales in its initial release of the data, but even if the real drop was 4%, that’s still significant given that turnover has been falling for a few months now.”

“The “summer fling” did happen, but it was pretty lacklustre – house price inflation only ticked a little higher. Meanwhile, it is starting to look as though the house prices will be even weaker than previously anticipated over late-2019. Measured nationwide and over the whole of 2019, it is starting to look as though house price inflation will fall a bit short of our forecast of 3%.”