NZ property prices in downward spiral
(See attached file: QVNZ_hp_Nov.pdf
There is no longer any question around whether New Zealand's housing market has turned south or not - it has. According
to today's QVNZ property market report, annual growth in national property prices eased to 11.4% in November (calculated
over the three months ending November 2007 in comparison to the same period last year), down from the 12.7% recorded in
October. It is important to note that the QVNZ data is recorded at the date of settlement, and due to the three month
moving average methodology, is a smoother, slower turning, lagging indicator of house prices. When compared to the REINZ
data series, both are now falling in unison. New Zealand's housing market is buckling under the weight of persistently
high interest rates, falling net-permanent immigration, and growing buyer concerns.
The average sale price fell from NZ$406,000 in October to NZ$393,000 in November - reflecting not only a sharp drop in
sale volumes, but the fact that the market is indeed more favourable to buyers, and sellers are having to lower their
New Zealand's housing market is now six months into what is likely to be a two-year slowdown, with all forward looking
indicators pointing to a dramatic drop in house price appreciation. We expect house prices to track sideways in annual
terms by 3Q08 (0%oya), with the risk of a slight contraction. Turnover in the market has plummeted, and the number of
days to sell a property has steadily increased, pointing to a decline in house price appreciation.