New Zealand house sales dropped sharply in September. On a sequential basis, the house sales in New Zealand fell 9 percent. Along with higher listings, this fall indicates toward a considerable slackening in market ‘tightness’.
On a seasonally adjusted basis, nationwide house sales dropped 9.4 percent in the month, with a 6 percent drop in Auckland and 10 percent fall in the remainder of the nation, with falls throughout all regions. Sales could be volatile on a monthly basis, but this comes on the back of weakening in recent months. Nationwide house sales have fallen 16 percent since February.
An earlier data showed that listings have also risen and were up 13 percent sequentially in September. It is likely that investors are moving out of the market in light of policy changes. Again, monthly moves could be volatile, but combined with softer sales volumes, it indicates to significant slackening in housing market tightness.
“If sustained, it is likely to lead to softening in price pressures in coming months. Relatedly, this slackening could also see it take longer to sell houses. In September, days-to-sell were flat”, stated ANZ in a research report.
The REINZ house price index rose 0.5 percent sequentially in the month. In the third quarter, the house price index rose 0.7 percent sequentially. On a year-on-year basis, house price inflation remained stable at 4.3 percent. House prices rose 0.5 percent sequentially in Auckland after recent declines, with annual house price inflation running at 0.8 percent. Excluding Auckland, house prices were up 5 percent sequentially in September, with annual inflation rising to 7.7 percent.
Several forces are buffeting the housing market and more volatility could be seen in months ahead than usual. Especially, the imposition of the foreign buyer ban has the possibility to create some bumps. However, a theme of weakness in becoming clear and resurgence is looking increasingly unlikely.
“On balance, we think the RBNZ will be comfortable easing loan-to-value restrictions at the November FSR, although the restrictions are expected to remain in place for some time” added ANZ.
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