Scared buyers desert plunging New Zealand housing market

The Reserve Bank of New Zealand (RBNZ) has released mortgage data, which shows that buyer demand has well and truly collapsed.

The total value of mortgage commitments plummeted 29% in the 2021-22 financial year, down massively from the 128% growth registered a year prior:

New Zealand mortgage commitments

New Zealand mortgage demand collapses.

The number of mortgage commitments issued has also crashed. There were only 14,952 mortgages originated in June 2022, which was the lowest June figure on record and around half the 27,105 mortgages originated in June 2021:

Number of mortgage commitments

Number of mortgage commitments halves.

The collapse in Kiwi buyer demand is unsurprising given the RBNZ’s aggressive interest rate hikes.

The REINZ’s latest agents survey showed that “rising interest rates” is the number one concern of Kiwi home buyers:

Major concern of Kiwi home buyers

Rising interest rates buyers’ number one concern.

The weaker buyer demand is also being reflected in New Zealand house prices, which have fallen sharply.

The REINZ’s House Price Index plunged 5.4% over the June quarter, with every major urban district falling.

June’s Trade Me property index also registered a “record breaking” monthly fall of 1.9% amid “skyrocketing supply”.

The RBNZ recently stated that it would continue hiking interest rates to contain inflation, which hit a 32-year high 7.3% over the June quarter.

Therefore, Kiwi buyer demand will remain weak and house prices will continue to fall. The writing is on the wall.

Unconventional Economist

Comments

  1. The Traveling Wilbur

    You know why there’s a collapse in NZ mortgages being taken out right? ‘Cause they’re all taking out mortgages in Australia now instead ‘eh!

  2. Hugh PavletichMEMBER

    How Central Bankers mistakes after 2019 led to inflation … Dr Bryce Wilkinson and Graeme Wheeler … The New Zealand Initiative

    https://www.nzinitiative.org.nz/reports-and-media/reports/how-central-bank-mistakes-after-2019-led-to-inflation/

    One-term Governor joins Brash, Spencer, Grimes and McDermott in criticising RBNZ’s QE-laden looseness since 2019 … Bernard Hickey … Interest Co NZ

    https://www.interest.co.nz/public-policy/116900/one-term-governor-joins-brash-spencer-grimes-and-mcdermott-criticising-rbnzs

    Former Reserve Bank governor Graeme Wheeler takes swing at central bank ‘hubris’ … Tom Pullar-Strecker … Stuff New Zealand

    https://www.stuff.co.nz/business/129375760/former-reserve-bank-governor-graeme-wheeler-takes-swing-at-central-bank-hubris

    Political fight over Reserve Bank interest rates and cost of living heats up … Luke Malpass … Stuff New Zealand

    https://www.stuff.co.nz/national/politics/129387624/political-fight-over-reserve-bank-interest-rates-and-cost-of-living-heats-up

  3. Hugh PavletichMEMBER

    Belatedly … opening the door to the supply of more affordable internationally priced building products to New Zealand … starting with plasterboard …

    100 containers of plasterboard heading to NZ to help solve Gib crisis … Melanie Carroll … Stuff New Zealand

    https://www.stuff.co.nz/business/industries/129402872/100-containers-of-plasterboard-heading-to-nz-to-help-solve-gib-crisis

    Twelve importers have 100 containers of plasterboard on their way to NZ, Building & Construction Minister Megan Woods says … Interest Co NZ

    https://www.interest.co.nz/property/116929/twelve-importers-have-100-containers-plasterboard-their-way-nz-building

  4. Well, well, well – keep arvo links locked to plebs and then you’re just asking for me to sound off lol.

    Hard questions for MB staff part 600.

    So, MB votes based on sound policy.

    MB had the best raft of policy this country has seen in a decade served up to them by the Shorten opposition in 2019. But the ALP also had the parental visas and MB lost their minds and through massively overblown criticism added to the negative noise of the Murdoch press and cost the Shorten opposition their chance to govern.

    Then we suffered another term of the worst governance in this country’s history. Then finally the constituents had had enough of the worst govt ever and finally decided to go ALP. An ALP that had had to change tack after losing when they should have won and the constituents needed them to win and didn’t because of the noise that MB was a part of and thus became the most basic small target policy offer you’ve ever seen. This isn’t the fault of ALP, this is the fault of MB, of me, of every enfranchised Australian- we caused this.

    So yeah, now we have a kind of “Labor” govt and they’re doing what they have to and obviously heaps of people are upset, especially dear old MB lol, and MB is especially upset about immigration.

    So here’s the rub – clearly the immigration aspect isn’t good, but, the last LNP term was so bad it will be historically seen as disgraceful governance of the highest order. But, one of the main reasons we had to suffer that was because MB and journalism in general rejected the ALP parental visas. And yet, here we are, with ALP backing more immigration – so what was the point MB? What did you achieve by stopping Labor in 2019? The immigration is still happening and was always going to happen. All you achieved was condemning this country to another term of corruption and poor LNP governance because you “vote for good policy” and then an inevitable ALP term that was less than it could have been because you “vote for good policy”.

    Yeah, it’s not footy, it’s not picking teams and blindly backing them, but it sure doesn’t work your way, if it did we wouldn’t have just suffered that ridiculous LNP term to only end up with a worse ALP than we could have had in 2019.

    Take the blame Leith, you have to own up to it. Your response the other day was pathetic.

  5. Funny how people are all so wise in hindsight. When I see One-Term-Wheeler commenting, I cant help but think of stones and glass houses.

    If he wants to know whose responsible for the dual mandate, he need only look in the mirror.

  6. Hugh PavletichMEMBER

    Why does Australia’s new dwelling approvals lag New Zealand’s by a wide margin, when adjusted for the respective populations?

    Posted on todays MB article thread …

    https://www.macrobusiness.com.au/2022/07/australias-home-builders-crushed-by-escalating-costs/#comment-4305506

    … Clearly … Australia will need to dramatically lift its new dwelling approvals / consents rate per 1000 population per annum of 7.0 (in contrasts to NZ’s 10.0) to accommodate all those fleeing Kiwis requiring more affordable housing …

    Australia’s home builders crushed by escalating costs … Leith van Onselen … MacroBusiness Australia … read more via hyperlink above …

  7. Hugh PavletichMEMBER

    Big increase in options for tenants pushes rents down … Miriam Bell … Stuff New Zealand

    https://www.stuff.co.nz/life-style/homed/renting/129391217/big-increase-in-options-for-tenants-pushes-rents-down

    The national median rent has fallen for the second month in a row, and a big increase in the number of properties listed for rent is behind it, Trade Me says.

    Rental listings nationwide were up 11% in June, compared to the same time last year, according to the property website’s latest figures.

    Wellington, Manawatū/Whanganui, and Auckland had the biggest annual increases in supply, up 51%, 21% and 15% respectively. Listings also increased in Southland, Northland, Canterbury and Waikato.

    At the same time, the national median rent was $570 a week in June, down 1% from $575 in May, but still up 5% annually.

    It was now $10 less than its all-time high in April, and it made it clear the market was different to that of last year, where rents climbed as supply struggled to keep up with demand, he said. … read more via hyperlink above …

  8. Hugh PavletichMEMBER

    (New Zealand) Collapse in residential construction sentiment highlights another gloomy ANZ Business Outlook Survey … David Hargreaves … Interest Co NZ

    https://www.interest.co.nz/business/116935/collapse-residential-construction-sentiment-highlights-another-gloomy-anz-business

    A spectacular collapse in sentiment in the residential construction industry is one of the standouts in another gloomy ANZ Business Outlook Survey (ANZBO).

    In speaking to the July ANZBO survey results, ANZ’s NZ chief economist Sharon Zollner said sentiment in the residential construction sector had undergone a “truly spectacular crash to fresh lows”.

    “The outlook for house-building has hit a brick wall in that there was a sharp fall in residential construction intentions. Note the fall in early 2020 [as seen in graph below] was due to lockdown – it’s difficult to imagine what would lead to such a rapid bounce this time.

    “Housing consents are now dropping, as foretold by the ANZBO data three months ago. Broader ‘dwelling’ consents (including apartments etc) are holding up better for now, but don’t tend to diverge from housing consents for long,” Zollner said.

    According to Statistics New Zealand the seasonally adjusted number of new stand-alone houses consented fell 1.4% in May, after falling 5.9% in April 2022. The seasonally adjusted number of new dwellings (including townhouses, flats, units, apartments and retirement village units consented fell 0.5%, after falling 8.6% in April 2022

    “The ANZBO data suggests consents may have a lot further to fall yet,” Zollner said. … read more via hyperlink above …
    .
    .
    Can we expect residential consents per 1000 population per annum to fall to California’s 2009 level of 1.0 / 1000 -0-ulation per annum ? …

    https://www.macrobusiness.com.au/2022/07/australias-home-builders-crushed-by-escalating-costs/#comment-4305547

    What I wrote some time following the GFC comparing Texas and California housing performances … illustrating the basket case of California was likely ‘under – housed’ by about a million units in comparison with Texas.

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