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Gauges looking like a Grimm fairy tale

The latest property gauges released by ANZ for January have a glimmer of hope to them, much like a Grimm Brothers’ fairy tale; just when you thought there was no hope... The eight gauges are used to assess the state of the property market and whether warning signs are emerging.

Friday, February 1st 2008, 12:24PM

by The Landlord

According to the report, three gauges show negative levels, two show neutrality, liquidity shows neutral-to-positive signs, and one also shows neutral-to-negative signs.

Affordability remains at extremely expensive levels for home buyers, which according to the gauge report is a negative sign. However, this could also be viewed as a positive effect on the market in terms of housing prices reaching their limit, and with affordability out of reach for most people, prices have nowhere to go but down.


With affordability so high, serviceability and indebtedness are also extremely high. This is because of historically high interest rates, which affect homeowners’ debt relative to income. Interest payments show no signs of consolidating yet. The bank says, “Housing affordability measures remain over-extended, and higher mortgage rates are starting to bite. Don’t expect any respite for a while yet.”

The final negatively geared gauge relates to consents and house sales. With housing affordability and debt so high, it is not surprising housing sales volumes are falling and consent issuance easing.

However, the supply-demand ratio is showing neutrality within the market.

Globalisation, which plays an extremely important role in the property cycle, is also showing neutrality, even though levels are “not that cheap. Median house prices are more expensive compared to the US (based on current exchange rates), but are cheaper than in Australia.”

Liquidity shows signs of being neutral-to-positive and despite the current financial market, remains abundant. But, the bank believes “global financial market volatility and changing attitudes towards risk have increased the likelihood that diminished appetites to lend could be pending from certain pockets.”

Migration inflows are stabilising, but are below historical averages. Migration is a key source of demand for new housing, and indicates neutral-to-negative influence on hosing prices, and only medium levels.

The bank concludes by saying,  “Increases in fixed rate mortgages over the past two weeks suggest housing demand will remain under pressure over the coming months. If house sales continue to fall, expect further downward pressure on house prices.”







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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.15 ▼4.04 4.49
ANZ Special - 3.65 ▼3.54 3.99
ASB Bank 5.20 4.15 4.09 4.39
ASB Bank Special - 3.65 3.59 3.89
BNZ - Classic - 3.65 ▼3.49 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
Housing NZ Corp 5.19 ▼4.15 ▼4.09 ▼4.39
HSBC Premier 5.24 3.35 3.35 3.35
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.65 3.85 3.95 3.89
Kiwibank 5.80 4.30 4.34 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.59 3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.69 4.79 -
Resimac 5.30 4.86 4.14 4.19
Lender Flt 1yr 2yr 3yr
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.69 3.69 ▼3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.65 3.59 3.99
The Co-operative Bank - Standard 5.15 4.15 4.09 4.49
TSB Bank 6.09 4.65 4.59 4.85
TSB Special 5.29 3.85 3.79 4.05
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.34 - - -
Westpac Special - 3.65 ▼3.54 3.99
Median 5.35 4.15 4.09 4.19

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