New Zealand’s house prices rise weakly in June, market likely to remain subdued

New Zealand’s adjusted house sales dropped 0.8 percent sequentially in June after a drop of 1 percent recorded in the prior month. On a year-on-year basis, sales growth ticked up to -6.1 percent, implying some stabilization in house sales at a low level, noted ANZ in a research report.

Nationwide, house prices rose modestly by 0.1 percent sequentially in the month; however, they dropped 0.7 percent quarter-on-quarter. On a year-on-year basis, price inflation slowed to 1.6 percent from 1.8 percent. The theme of regional divergence continues, with Auckland house prices underperforming the wider market in June. Auckland was down 0.2 percent sequentially and is down 3.7 percent in the past year.

In the remainder of New Zealand (excluding Auckland), house price inflation rose at a more robust rate of 0.4 percent sequentially. Nevertheless, the monthly print has seen annual house price inflation fall to 6.5 percent year-on-year, implying that weakness in the housing market is becoming more widespread.

In the past three months, price rises have been especially solid in Northland, Manawatu-Whanganui, and Southland, but subdued elsewhere. All regional housing markets outside Auckland and Canterbury continue to be tight, in line with the divergence in house price inflation. Nevertheless, days to sell rose in most regions in June. Nationwide days to sell rose to 41 from 40 days, indicating a bit more slack. Days to sell in Auckland also rose to 45, above its historical average of 36.

“Recent prints suggest that the substantial falls in fixed mortgage rates over the past year and the ruling out of the capital gains tax are not providing a noticeable boost to the market. We expect the market to remain subdued overall, with house price growth around 3 percent over the next few years”, said ANZ in a research report.

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