The Real Estate Institute of New Zealand (REINZ) has released its September house price results, which registered a small monthly rise in values, but another slowing in annual growth.
In the month of September, the national stratified median price rose by 0.2% to around $443,000. Prices rose by 0.8% in Auckland but fell by 2.8% in Wellington and by 1.8% in Christchurch. Over the quarter, prices rose by 0.5% nationally, with increases recorded in each of the major capitals.
The price changes are shown more clearly in the below chart, which shows the values in index form since 2005:
Annual house price growth slowed to 4.1% nationally in the year to September 2014 to be 16.4% above the November 2007 peak. Prices in New Zealand’s largest city, Auckland, rose by 7.7% in the year to September to be 34.9% above their July 2007 peak. This was followed by New Zealand’s second biggest city, Christchurch, where prices rose by 7.1% over the year to be 21.2% above their 2007 peak. Finally, prices in the capital, Wellington, rose by 1.7% in the year to September but were 0.4% below the September 2007 peak.
The below chart shows the annual price growth in trend terms (3-month moving average) in order to smooth volatility, with annual price growth clearly weakening:
And the next chart shows growth at the national level only, which paints an even clearer picture:
The overall weakening of price growth amid the strong domestic economy and rising population growth (immigration) continues to suggest that the RBNZ’s macro-prudential curbs on high risk mortgage lending and recent interest rate increases are working.
Other indicators support this contention.
According to the REINZ, sales volumes were 12.0% lower than September 2013. In a similar vein, New Zealand housing loan approvals continue to fall, as shown below:
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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