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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
NEW ZEALAND
Q4 building activity volumes fell 0.1% q/q to be down 0.9% y/y but the residential component fell 2.4% q/q to be down 5.3% y/y. This is a concern given that net migration rose over 161k in 2023 which is impacting the housing market with home prices rising for five consecutive months to February and rents up 4.5% y/y in Q4, which the RBNZ noted was an impact of higher population growth. If residential investment doesn’t improve soon, housing market inflation and affordability are likely to deteriorate.
NZ building volumes y/y%
Source: MNI - Market News/Refinitiv
- CoreLogic home prices rose 0.2% m/m in February to be down only 1.4% y/y and 2.8% above the September 2023 trough. Prices fell over 13% from their pandemic peak but housing affordability has still deteriorated due to the rise in mortgage rates. Rising prices even though rates are on hold are only going to make this situation worse.
- Demand is strong with REINZ dwelling transactions rising sharply over the year to January. Sales tend to lead prices.
- Housing affordability deteriorated significantly over the 18 months to Q4 2023 to stand 36% below trend. The pace has eased though with Q4 down 2.3% y/y after -9.9% in Q3 as the RBNZ has been on hold since May last year but the pickup in prices may stall any improvement.
- In terms of house prices-to-rents though, NZ housing was undervalued in Q4 standing 4.8% below trend as home prices were still down 4.5% y/y while CPI rents rose 4.5% y/y.
NZ housing affordability %
Source: MNI - Market News/Refinitiv
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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