ANZ has released its latest Property Focus report which states that house price growth and sales volumes slowed sharply in the last quarter of 2015.
This occurred as the new tax and LVR measures, which are intended to slow investor demand, took effect.
The slowdown looks most acute in the Auckland market – despite its record net immigration and tight inventories, the report said.
However, the strong population growth has contributed to the city’s ongoing dwelling “shortages”.
The bank’s chief economist, Cameron Bagrie, said that, while Auckland’s construction activity may be ramping up, booming net immigration implies a moving target for housing demand.
Migration flows to and from New Zealand are one of the major drivers of housing market cycles, he said.
For example, the early-1970s, mid-1990s and mid-2000s booms coincided with large net migration inflows.
The latest Statistics New Zealand data, which was released yesterday, showed that migration actually fell slightly in December 2015.
Once seasonally adjusted, the figures showed a net gain of 5,500 migrants in December, which was down from November’s record high of 6,300.
But there was another record annual net gain of 64,900 migrants in the December 2015 year. This was up from the previous record 63,700 net gain set in the November 2015 year.
Meanwhile, the latest Statistics New Zealand data shows that, once seasonally adjusted, residential dwelling consents grew by 2.3% nationwide in December 2015.
The national trend increased by 1.1% and hit its highest level since mid-2004.
Further, it seems that consents in Auckland are definitely on the rise – with a 21% year-on-year increase over 2015.
In the ANZ report, Bagrie said that Auckland’s consent trend issuance is currently annualising at close to 11,000.
“This is encouraging, but it does not look sufficient to make inroads into reducing housing ‘shortages’ given demographic demand pressures.”
The demand resulting from Auckland’s ongoing population growth and supply shortage means that, while December data showed some modest recoil, house prices have held up well so far.
However, Bagrie said the Auckland housing market was now considerably less buoyant than it was before the introduction of the tax and LVR measures in October and November.
“Markets in other regions are heating up, supported by historically low mortgage interest rates, relaxed LVR criteria and the “ripple’ impact of earlier Auckland house price strength.”
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