NZ: Housing market slowing – Westpac

Dominick Stephens, chief economist at Westpac, notes that the New Zealand’s housing market slowed sharply over the first half of 2019.

Key Quotes

“Measured across New Zealand as a whole, June was the first quarter in which prices have fallen since December 2010. But the Government cancelled its proposed capital gains tax in April, and fixed mortgage rates have been falling precipitously.”

“In May, the Westpac Economics Team predicted that tumbling interest rates and the cancellation of CGT would cause the housing market to pick up. We recognised that a range of factors would hold the market back, such as slowing net migration, burgeoning building activity, the foreign buyer ban, and the move to prevent landlords from using losses on rental profits to reduce their overall tax bill. But we predicted that the powerful effect low interest rates have on affordability would eventually dominate. Consequently, we forecast that house price inflation would accelerate to 7% per annum next year, from about 2% now.”