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ANZ analysts suggest that New Zealand’s housing market is tightening up on the back of lower mortgage rates.

Key Quotes

“House price inflation continues to accelerate, up 4.2% y/y nationally in November. And while regional divergence remains a key theme, most regions are tightening. House sales recoiled (down 6.1% m/m) after a surge in October (+8.9% m/m) and are holding steady after a prolonged period of softness.”

“Days to sell fell again, and at 36 days are below the historical average of 39. Mortgage rates are very low historically, which will spur on otherwise dormant buyers, but appear to have halted their slide.”

“We think resurgence in the housing market will remain the theme for a while. However, it will soon clash with tightening credit availability as a result of new bank capital requirements, not to mention the LVRs being held at their current levels at least until May 2020.”

“Add policy and affordability constraints to the mix and housing market shouldn’t surge to double-digit annual growth, but that possibility certainly can’t be completely ruled out. Once the market really gets the bit between its teeth it can be hard to rein in.”