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ANZ analysts note that the New Zealand’s housing market has tentatively stabilised as nationally, house prices were flat m/m in July (up 1.7% y/y 3mma), but the theme of regional divergence continued.

Key Quotes

“Auckland prices are down 3.3% y/y, while pockets of strength remain in the regions of Manawatu-Whanganui and Southland. Falls in mortgage rates over the past year have not provided a noticeable boost to house prices so far, but the recent pick-up in sales supports our expectation of stabilisation in prices from here.”

“Overall, the outlook for house price inflation is delicately balanced. Lower mortgage rates (reflecting a lower OCR), gradual loosening of the LVR restrictions, and an ongoing supply-demand imbalance are expected to provide ongoing support. However, headwinds in the form of a cautious banking sector, wary investors (particularly given policy changes), a deteriorating labour market outlook and affordability constraints limit the upside.”