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ANZ analysts point out that New Zealand’s housing market has tightened a touch in recent months, although the volume of house sales remains subdued.

Key Quotes

“House prices rose 2.6% y/y at the national level in September, up from 2.1% in August. Auckland house price inflation is still negative in annual terms, but a little less than previously, contracting 1.7% y/y (versus -2.6% y/y in August). Indeed, Auckland house price inflation in the September month (up 0.9% m/m) was broadly in line with that seen in the rest of the country. But housing market activity remains soft.”

“House sales fell 0.6% m/m, but annual growth picked up to 2.7% y/y. That said, nationwide days to sell dropped from 40 days to 37, supported by a tightening in the Auckland market, with listings very low. The boost to national house prices in September may reflect support from lower mortgage rates over the past year, but still-soft activity suggests the upside is capped for now.”

“We expect the market to remain subdued, but there is certainly a risk that lower mortgage rates drive a larger-than-expected pick-up.”