The Real Estate Institute of New Zealand (REINZ) recently released its latest house price index, revealing a 0.3% decrease in June. Additionally, home sales have weakened further, with a 4.8% drop in transactions in June following a revised 0.8% fall in May, adjusted for seasonal variations.
According to a significant bank, ASB, the market has seen little movement despite reduced mortgage interest rates. Analysts point to decade-high housing inventory levels and a lack of significant cooling in new listings as critical factors preventing the recovery of house prices. Current inventories, now at 32.7k seasonally adjusted, are approximately 1.8 times what they were during the peak house price period in November 2021.
Indicators of market tightness continue to show easing, suggesting that house sales turnover lags behind the rise in new listings, exacerbating the imbalance between supply and demand.
Further analysis from Justin Fabo of Antipodean Macro shows that, when adjusted for inflation, real house prices have fallen to pre-pandemic levels across major New Zealand markets. The dwelling price-to-income ratio has similarly returned to former levels, and mortgage repayment affordability has increased due to the reductions in home prices and mortgage rates.
This adjustment in house prices drastically improves the accessibility of housing for New Zealand residents.
In comparison, Australian policies continue to stimulate housing demand. These include initiatives like the Albanese government's 5% deposit scheme for first-time buyers, extensions to the Help-to-Buy shared equity scheme, and lending rule changes excluding student debt in loan serviceability assessments. By stabilising or enhancing buying power, such measures contribute to sustaining elevated property prices in Australia, contrasting sharply with the trajectory witnessed in New Zealand.
