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House prices could tumble at the same time across the country

The ANZ says it wouldn’t be surprised if house price growth turned negative for a time in all the country’s regions.

Saturday, April 30th 2022, 11:43AM

by Sally Lindsay

The post-pandemic housing cycle has been broad based, with all 14 regions ANZ monitors experiencing annual house price inflation well into the double digits, but now regions now seeing a slowing.

There has been some variance in timing, with some regions now further down the house price inflation mountain than others, says ANZ chief economist Sharon Zollner in the bank’s latest Property Focus. 

There has also been some significant variance in the degree of price gains, with the annual lift in Gisborne’s median sale price peaking just above an astonishing 60%  year-on-year in June last year versus a peak just shy of 25% year-on-year in Southland.

Zollner says it’s fair to say all regions are susceptible to further house price falls from here, but provided the labour market holds it together the housing market should be able to achieve a soft landing.

Shifting supply

“In an absolute sense, the experience of all regional housing markets has been much the same in recent years: strong demand and constrained supply have led to rapid house price growth.”

However, some stark regional differences persist in the levels. At $1,166,108 the median price in Auckland is about 3.5 times higher than in the West Coast, she says.

“No region can hide from the shifting supply and demand balance underway. Higher mortgage rates will impact demand everywhere, and that appears to be making would-be buyers all the more patient.”

While all market tightness indicators suggest things are on a cooling trajectory, some markets are more convincingly “cool” than others. All regions appear susceptible to much weaker house price inflation over the year ahead.

Auckland and Canterbury are the key standouts when it comes to pipeline building activity, with consents per capita suggesting solid demand for housing in the country’s biggest and second-biggest cities. At 33.2% and 15.7% respectively, these two regions account for almost half of all house sales across New Zealand.

All regional economies appear to be on a robust footing, with retail spending either close to, or above, trend, says Zollner. 

She says high inflation and rising interest rates are expected to take the heat out of domestic demand, and that’s likely to weigh on housing markets in a self-reinforcing fashion.

“There is a point where higher interest rates will bite hard enough to get inflation under control, and part of that transmission mechanism will be via a weaker housing market taking some heat out of discretionary spending by eroding household wealth effects.

By the time the RBNZ has finally tamed the CPI inflation beast, it may not be long before it’s looking like the economy is in need of a pick me up once again. But for now, the bigger risk is the RBNZ not stomping out the inflation fire before it becomes a much harder blaze to combat. It’s a tough job, and housing is directly in the firing line. But it needs to be done,” says Zollner.

Tags: house prices

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Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 6.05 6.15
TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 16 May 2022 9:03am

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