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Liz Kendall, senior economist at ANZ, notes that New Zealand’s REINZ house sales increased 14% m/m in January (sa, ANZ estimate), reflecting some continuation of recent data volatility, with perhaps a small bump from the RBNZ’s relaxation of loan-to-value ratio restrictions.

Key Quotes

“Overall, sales have been flat but oscillating, to be 1% lower than a year ago (3mma). House prices rose 0.3% m/m, with annual growth tracking at 3.1% y/y.”

“Auckland weakness continues, with prices down 2% over the past year. Looking forward, we expect continued gentle moderation in price pressures, with headwinds weighing on the market.”

“Affordability constraints are being felt and investors are wary, especially with the longer-term prospect of a capital gains tax looming. Credit availability does not appear to be a particular constraint, though proposed changes in bank capital requirements will likely weigh if implemented.”