New Zealand housing faces biggest ever crash


ANZ Economics has released its Business Outlook survey for July, which shows that both business activity and confidence have tanked:

New Zealand business activity and confidence

Business activity and confidence have crashed.

The result follows the collapse in both consumer and government confidence to near record lows in June:

New Zealand consumer and government confidence

New Zealand consumer and government confidence has also collapsed.


The outlook is especially dire for New Zealand’s housing market, with ANZ recording that “residential construction intentions plummeted again to a fresh record low”:

Residential construction intentions

Residential construction intentions point to recession.

ANZ notes that “housing consents are now dropping” and that the “ANZBO data suggests consents may have a lot further to fall yet”. It also explains that “the fall in early 2020 was due to lockdown” but that “it’s difficult to imagine what would lead to such a rapid bounce this time”.


Therefore, construction intentions are pointing to a sharp slowdown in building activity, which will weigh heavily on New Zealand’s economy over coming quarters.

Arguably, the bigger worry for the economy relates to house prices, which have already fallen sharply in response to the Reserve Bank of New Zealand’s (RBNZ) aggressive interest rate hikes.

The REINZ’s latest House Price Index – the preferred measure of the RBNZ – recorded a steep 5.4% decline over the June quarter, with all major urban areas registering quarterly falls. The Trade Me property index similarly posted a record a 1.9% monthly fall in June amid “skyrocketing supply”.


Household consumption is the major driver of New Zealand’s economic growth. Therefore, the sharp lift in mortgage rates, combined with plunging house prices, suggests household consumption will soon fall sharply, presenting further stiff headwinds for the economy.

The RBNZ this month stated that it would continue raising interest rates to fight inflation, which hit a 32-year high 7.3% over the June quarter.

If the RBNZ follows through with its guidance, New Zealand housing will face its biggest ever crash, which also risks throwing the economy into a painful recession.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.