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Analysts at ANZ note that since late 2017, NZ households have been building their housing equity which in part reflects reduced turnover as the housing market has cooled.

Key Quotes

“Recent lower turnover partly reflects government policy changes, uncertainty and affordability constraints. But credit conditions have played an important role in reducing turnover and building housing equity too.”

“The fact that those entering the market now have bigger buffers does help mitigate the risk and the potential fallout of a disorderly housing market downturn, with macro-prudential policy having played an important role here. But in light of financial stability risks, we expect that the RBNZ will take a cautious (and gradual) approach to easing loan-to-value ratio restrictions. An easing in November is possible, but settings are expected to remain “tight” for some time.”

House prices in Auckland continue to fall and houses are taking longer to sell, meaning further weakness in prices is possible.”

“Outside Auckland and Canterbury, housing markets remain tight and it’s reasonable to expect that pressures in these markets will continue.”

“Overall price pressures are expected to continue to gradually moderate from here. But given the large, offsetting forces at play, there may be some bumps in the road ahead.”

“The economic outlook is looking less assured and there are questions around the strength of domestic demand going into the second-half of the year. Data has been mixed but is generally a bit more downbeat: businesses are pessimistic and consents have dipped, but households have been resilient.”

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