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ANZ analysts note that New Zealand’s nationwide, house prices were up 0.9% m/m in September, to be up 1.7% q/q. Annual house price inflation rose to 2.6% from 2.1%.

Key Quotes

“In contrast with recent trends, Auckland house price inflation kept up with the broader market in September and the Auckland market showed more signs of activity. Auckland house prices were up 0.9% in the month, to be down 1.7% over the past year. In the rest of New Zealand (ie ex-Auckland), house price inflation rose a similar 1.0% m/m. This saw annual house price inflation pick up to 6.6% y/y from 6.3% in August.”

“Prices were robust in September, but monthly house sales less so. We estimate seasonally adjusted house sales fell 0.6% m/m in September, following a 6.1% m/m drop in August. Sales did pick up 7% m/m in Auckland but fell 2.4% elsewhere. Annual sales growth increased to 2.7% y/y (3mma) from 0.9%.”

“The housing market tightened further in September to be a bit tighter than historical norms. Nationwide days to sell – a measure of market slack – dropped from 40 days to 37, supporting by a tightening in the Auckland market. Regional housing markets outside Auckland and Canterbury generally remain tight – although Northland and the West Coast markets have become less tight, with days to sell ticking up above average levels.”

“Lower mortgage rates appear to have provided a boost to house prices in recent months. But, while the housing market is tight, subdued sales activity supports our view that the market is unlikely to take off substantially from here. However, it’s fair to say the outlook is highly uncertain at present. Lower mortgage rates, government policies, an uncertain migration impulse, an increasingly uncertain outlook for household incomes, and possibly upcoming LVR tweaks are all sending mixed signals.”