New Zealand Property – Page 2 – Digital Finance Analytics (DFA) Blog

New Zealand In The Teeth Of The Storm!

The current storm in New Zealand will hopefully clear in the next few days. But the other storm – falling home sales and prices in reaction to higher mortgage rates, will take time to work through. The RBNZ has not yet finished the tightening cycle.

So we look at the latest REINZ figures, which reveals a significant slowdown.

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New Zealand Home Prices Continue To Slide

The REINZ has released their report for August 2022 today, and it’s a story of continued weakness across the housing market in New Zealand, which is unsurprising given the significant cash rate hikes imposed by the Reserve Bank there.

So today we will look at the data, and also highlight how the story is still being spun by the industry to try and turn a profoundly negative story positive. Well good luck with that, as the OCR is lifted higher still.

They report that across New Zealand, median prices for residential property (excluding sections) decreased 5.9% annually, from $850,000 in August 2021 to $800,000 in August 2022. Month-on-month, this represents a 1.2% decrease from $810,000 in July. The seasonally adjusted figures show a 2.1% decrease in the median price as we moved from July to August, suggesting weaker performance than expected.

The median residential property price for New Zealand excluding Auckland remained unchanged compared to last year at $700,000. There was a month-on-month decrease of 2.8% from $720,000. A better way to report that, is all gains from the past year have now been extinguished on average.

Today’s post is brought to you by Ribbon Property Consultants. If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you. Buying property, is both challenging and adversarial. The vendor has a professional on their side. Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make. Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest. Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

Annual NZ House Prices Fall For The First Time Since 2011!

The REINZ released their July 2022 data and it tells a continuing story of a weaker market as activity and prices continue to ease and New Zealand house prices falling in July with the median price recording its first annual fall since 2011. The seasonally adjusted median nationwide house value in July fell 2.8% compared with the previous month and was down 1.6% year-on-year, according to REINZ.

The unadjusted median house price was down 1.8% on year. “While the median property price is showing an annual decrease, affordability remains an obstacle for many — which is now being driven by rising interest rates, inflation and tighter lending criteria,” said Jen Baird, chief executive at REINZ, in a news release.

House prices in New Zealand jumped more than 40% in the two years to November 2021. However, a combination of tighter credit, more housing and rising mortgage rates is now weighing on prices.

Kiwibank senior economist Jeremy Couchman said in a note that the first fall in 11 years might be a shock but it needs to be noted that the price falls only put house prices back at levels seen last May. “Nevertheless, house prices have further to fall in the current cycle, as credit conditions remain tight, and confidence is lacking,” he said

The RBNZ, which must consider house prices in its policy deliberations, began raising the cash rate in October last year, describing house prices as “unsustainable”.

Since then, it has said it expects prices to fall 15% from their peak in November. ANZ Bank said in a note that housing was now “decidedly cool” and there was not much in the economic outlook to stop that.

Go to the Walk The World Universe at https://walktheworld.com.au/

New Zealand Wins The Bubble Prize!

World equities are now in a bear market. The most excessive speculation has already been washed out of the system. Those warning of bubbles in bitcoin and other cryptocurrencies, meme stocks, or the growth tech companies have been proved right.

If there is one asset that should come under scrutiny, it is real estate, whose life blood is credit. For a double whammy of higher rates and the lasting effects of the pandemic, look to office property. Remarkably, Bloomberg’s index of US office property real estate investment trusts, or REITs, is slightly lower now than it was 20 years ago, and almost back to the lows it hit during the worst of the pandemic in 2020.

That brings us to housing. Rates in the mortgage-backed bond market are surging, as would be expected given the move in Treasuries, while the rates actually offered to US borrowers are even higher. Typical 30-year mortgage rates are now a whisker below 6%, and approaching the pre-crisis high of 2006

A world economy already contending with raging inflation, stock-market turmoil and a grueling war is facing yet another threat: the unraveling of a massive housing boom.

As central banks around the globe rapidly increase interest rates, soaring borrowing costs mean people who were already stretching to buy property are finally reaching their limits. The effects are being seen in countries such as Canada, the US and New Zealand, where once-hot residential real estate markets have suddenly turned cold.

Go to the Walk The World Universe at https://walktheworld.com.au/

An Outside In View Of New Zealand Housing

New Zealand Housing makes an interesting case study, given the Central Bank there started lifting rates last year, following a strong period of credit driven price growth.

Now the IMF has reported on the state of play, and they highlight the risks in the system. https://www.imf.org/en/Countries/NZL

In its latest review of the New Zealand economy, the IMF has had a close and detailed look at the housing market. The housing market they say constitutes a risk in view of borrowers’ vulnerability to rising mortgage rates, high household debt, and banks’ exposure to housing.

The IMF says that financial stability risks from a sharp downturn in the housing market are limited given high bank capitalisation, “but pockets of vulnerability, particularly amongst recent borrowers, may exist”.

“More broadly, there is likely to be a larger impact on consumption through wealth and sentiment effects. In a scenario of a marked housing correction, macroeconomic policy support may be needed to avoid second round effects and a pronounced downturn.”

Go to the Walk The World Universe at https://walktheworld.com.au/

New Zealand Home Price Falls Accelerate!

The REINZ came out last week with their report for March 2022, which they say solidifies the changes in the market seen over the past months as pressure on property prices eases, inventory levels increase, demand softens and sales activity decelerates.

“There is a pervasive feeing of uncertainty, and people are hitting pause. While more stock makes this a favourable market for buyers who find themselves in a position to wait for the right property and negotiate — particularly buyers with their finances lined up — many are balancing fear of over paying with an outlook of further interest rate increases. Conversely, sellers are holding out for the right price in a changed market.

So, we look at the latest numbers and consider the consequences.

Go to the Walk The World Universe at https://walktheworld.com.au/

The New Zealand Time Machine Housing Pivot Bites!

New Zealand housing is a significant bellwether for other markets, seeing as pricing peaked early due to excessive stimulus associated with COVID, and then the Central Bank started to lift the cash rate ahead of other central banks. Now we are seeing the impact spilling out into the housing sector.

Westpac, the last of the main banks, has now moved to raise home loan rates. Though like two other rivals, Kiwibank and BNZ, they have refrained from raising their 3.99% one year fixed rate.

The QV House Price Index has experienced its largest drop in more than a decade, with the main centres currently taking the brunt of the impact of rising interest rates and tightening bank credit.

Today’s post is brought to you by Ribbon Property Consultants.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.