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New Zealand's housing market's sharp slowdown

Oct 04, 2017 | 0 Comment(s)

Trend: house prices up 3.99% y-o-y in Q2
New Zealand's housing market is slowing sharply, mainly due to the introduction of new lending restrictions in October last year and worsening affordability. 
Median house prices rose by 3.99% (inflation-adjusted) during the year to Q2 2017, a sharp slowdown from y-o-y growth of 10.43% the previous year. House prices fell 2.49% q-o-q during Q2 2017.
Analysis: dramatic slowdown. 
Dwelling sales in New Zealand were down 24.5% y-o-y in July 2017, according to the Real Estate Institute of New Zealand (REINZ). All regions saw falling demand.  'Days to sale' rose by 4 days to 35 days y-o-y in July 2017.   
The sharp decline in house sales this year in New Zealand indicates that restrictions imposed by the government are finally doing their job - but are slowing the market too successfully. 
Rents, rental yields: quite low yields at 3.73%
Apartment costs in Auckland are around $7.082 per sq. m.
New Zealand: city centre apartment, buying price, monthly rent (120 sq.m.) 
   Buying price  Rent per month  Yield
 Auckland  $849,840  n.a.  3.73%
Recent news: New Zealand's economy is expected to expand by 3.2% this year and by another 3.7% in 2018, according to the New Zealand Treasury. The Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) unchanged at a record low of 1.75% in August 2017, amidst growing signs of a housing market slowdown. 


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