New Zealand’s housing market is weighing on some otherwise positive economic indicators, the Treasury’s monthly report says
Data released for the March quarter of 2017 showed some reasonable growth in New Zealand’s economy, the Treasury says, but April’s data was more mixed.
While retail trade and dairy prices and exports were up from April 2016, the report highlights lower house sales, flat house prices, and a fall in monthly consents.
Home building consents data published by Stats NZ reveals a 7.6% decline from a year earlier following a 1.2% dip in March. February has shown a 15% rise.
Meanwhile, REINZ data shows flat activity in April, rising just 0.4% nationally and 0.2% in Auckland compared to March.
Home price increases of 5.2% in Auckland and 12.8% in the rest of New Zealand mostly occurred before October 2016, the Treasury says, coinciding with the new LVR restrictions.
On a positive note, the Treasury says that the weakness in price growth is not expected to last due to the rising population which is expanding faster than home supply.
The report also says that interest rates, which remain low by historical standards, are not forecast to rise more than moderately.
Other economic indicators also support the housing market with employment growth bringing the proportion participating in the labour force to a record high of 70.6% while unemployment fell to 4.9% in March.
Wage growth is still subdued though with earnings in the private sector flat at 1.1% in March, its lowest rate since December 2010. Public sector earnings were stronger at 1.5%; both are below the 2.2% inflation rate though.
While retail trade and dairy prices and exports were up from April 2016, the report highlights lower house sales, flat house prices, and a fall in monthly consents.
Home building consents data published by Stats NZ reveals a 7.6% decline from a year earlier following a 1.2% dip in March. February has shown a 15% rise.
Meanwhile, REINZ data shows flat activity in April, rising just 0.4% nationally and 0.2% in Auckland compared to March.
Home price increases of 5.2% in Auckland and 12.8% in the rest of New Zealand mostly occurred before October 2016, the Treasury says, coinciding with the new LVR restrictions.
On a positive note, the Treasury says that the weakness in price growth is not expected to last due to the rising population which is expanding faster than home supply.
The report also says that interest rates, which remain low by historical standards, are not forecast to rise more than moderately.
Other economic indicators also support the housing market with employment growth bringing the proportion participating in the labour force to a record high of 70.6% while unemployment fell to 4.9% in March.
Wage growth is still subdued though with earnings in the private sector flat at 1.1% in March, its lowest rate since December 2010. Public sector earnings were stronger at 1.5%; both are below the 2.2% inflation rate though.
