VIEW: Westpac Doesn’t See Rates Supporting Housing Until Year End

Westpac notes that the NZ housing market was “unremarkable” in April with an increase in supply helping to boost sales but limit price rises. The REINZ price index rose 0.1% m/m to be up 2.8% y/y while levels of house sales are below trend and fell 3.6% m/m in April to be up 25.3% y/y. It expects the housing market to pick up though but with rate cuts still some way off, a “meaningful drop” in mortgage rates is unlikely before year end.

• “There’s been a notable pickup in turnover recently, with sales running at around 6,000 per month. That reflects a surge in new listings in recent months, which has provided more options for buyers. But even with the increase in sales, the stock of unsold homes on the market has built up to its highest level since 2015.”
• ‘We expect the current softness in the housing market will gradually give way to a period of stronger activity, underpinned by a multi-decade high in population growth and policy changes to support investor demand.”
• “However, interest rates are the biggest cyclical driver of house prices, and with the Reserve Bank signalling that it expects to hold the line on the OCR until early 2025, it may be later this year before we see a meaningful drop in term mortgage rates.”