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Reinz Housing Figures For August Have Just Been Released.

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Fuseworks Media
Fuseworks Media
Reinz Housing Figures For August Have Just Been Released.

* Seasonally adjusted turnover is down 3.9% on the previous month, and turnover for the last three months is down 26% on year ago levels.

* Prices are little changed. The REINZ Stratified House Price Index (HPI) was flat when seasonally adjusted (unadjusted +0.3%).

* The HPI is also now flat when compared to year ago levels. At a regional level the price picture is a little mixed when compared to a year ago using the HPI. In Christchurch, housing prices are up 5.3% while Auckland and Wellington are up 0.7% and 0.8% respectively. Prices have recorded modest declines in other regions, dragging on the overall index.

* Nationwide prices peaked in late 2009, and REINZ's House Price Index is now down 2.5% on the level recorded in November 2009, and 4.6% on the all time high recorded in July 2007.

* Days to sell remain high, with the seasonally adjusted median days to sell standing at 44 days. This compares to last month's 45 days, and the long run average of 38 days. Median days to sell have been steadily increasing since hitting a low of 34 days a year ago.

Comment

The REINZ housing figures showed housing market activity remained subdued during August. Median days to sell remains high at 44 days (s.a), reflecting a market that remains tipped in the favour of buyers.

During 2008, when the housing market was particularly weak, and prices declined around 10%, median days to sell stretched out to 57 days. We do not expect the market to soften to the degree seen in 2008, but expect conditions to remain tipped in favour of buyers as the market remains subdued over the coming year.

House prices held up surprisingly well over the first half of 2010, given the weakness in demand during this time. Given the weakened fundamentals for housing demand, we expect house prices will come under pressure, falling around 3% over the next year.

Implications

The ongoing weakness in the housing market will be of little surprise to the RBNZ, which is factoring an economy that is rebalancing away from household-led growth toward export-led growth. A slow housing market will be part of this rebalancing over the next year.

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