QVNZ house prices 2nd consecutive monthly decline
QVNZ house price report posts second consecutive monthly decline.
(See attached file: NZ_housepirces_11feb08.pdf [Full release with charts])
According to the QVNZ January report, annual growth in house prices in New Zealand continued to fall. The annual growth rate dropped to 8.9% (JPMorgan 9%), the lowest rate in 12 months. The annual growth rate has fallen from 10% in December, 11.4% in November and 13.3% in August (calculated over the three months ending December 2007 in comparison to the same period last year). In actual terms, the average smoothed property price rebounded slightly to NZ$390,636, having dropped in November and December (the QVNZ series is a three month moving average, using settlement dated data).
Of the five major cities, only one recorded a decline in its three month moving average house price series. New Zealand's capital city Wellington, its largest city Auckland, and its student city Dunedin, all recorded increases of 1.4%m/m. House prices in Christchurch made that solid monthly gain of 1.6%m/m. Hamilton's house prices fell 0.2%m/m. Despite the slight rebound in the data in January, the undertone of the report remains very weak, with annual growth in all cities declining over the month.
The RBNZ is likely to keep interest rates on hold at an elevated 8.25% for at least the next two quarters, with the only material risk being another rate rise to 8.5% before the October parliamentary election. Furthermore, net-permanent migration flows have slowed to a trickle. With this in mind, growth in house prices is likely to continue to decline. QVNZ Christchurch spokesman Richard Kolff said "Already this month we have seen some properties go to mortgagee sale and this is likely to become more prevalent as the year progresses." JPMorgan maintains its view that the New Zealand housing market is seven months into a downturn, and that New Zealand's housing market will track sideways (0%oya), if not post a small contraction, by 3Q08.