ANZ Property Focus

PHOTO: Antonia Watson –  ANZ Bank New Zealand

What happened last week week? Last week’s April house price data was the first chance to see the impacts on the red-hot housing market of the Government’s housing policy changes. As it happened, house prices rose 1.7% m/m, down from 2.8% previously (ANZ seasonal adjustment). And the number of houses sold dropped 12.8% m/m.

Overall, that points to some softening in housing activity, but prices (which lag sales) have a bit more momentum than we had pencilled in. That doesn’t mean that the impact of the policy announcements is smaller than we had expected. A single data point is just the opening bid. There’s a lot going on, and we’ll need to keep our finger on the housing pulse for a while yet. But we have tweaked our house price forecast to take into account the stronger starting point (figure 1).

The fundamentals of the housing market continue to suggest a moderation in house price growth from here: affordability constraints, mortgage rates that are more likely to go up than fall further, loan-to-value ratio restrictions back and bigger than ever, building consents at historical highs, and population growth that’s severely curtailed by the border closure.

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