VIEW: Westpac Sees Population Growth Supporting Housing Market

Westpac observes that while there was more activity in the NZ housing market in February, it was still “treading water”. The level of sales is now back to where it was in mid-2023 but the “the stock of unsold homes is still rising, which is a negative signal for prices in the near term”. Westpac expects the housing market to strengthen given the “multi-decade high in population growth and a lift in investor sentiment’ but until mortgage rates fall it is “likely to remain moribund”.

• “The REINZ house price index was flat for the month in seasonally adjusted terms. Prices are up by about 3% from the low point reached a year ago.”
• Net migration inflows “slowed sharply to under 3,000 in January, led by a surge in departures. However, the large outflows that were initially reported for the previous few months have now been largely revised away.”
• “We continue to watch two issues. The first is the extent to which migrant inflows recede, or whether they remain historically high. It’s likely that we’re still seeing a catch-up on movements that were delayed during the Covid border closure. But at some point, the state of the economy will come to bear on people’s intentions to move to New Zealand.”
• “The second issue is how the accumulated inflow of migrants to date will affect the economy. The effects can be mixed – alleviating supply-side constraints in some areas, while adding to pressures in other areas such as the demands on the housing stock.”