Flash: NZ property market hotter, next REINZ big test - BNZ

FXstreet.com (Barcelona) - New Zealand hot property market got hotter on September, with surging prices and major over-valuation issues, which reflects "a relative lack of supply in parts, hot demand" notes Craig Ebert, Economist at BNZ, who also assumes the rise in house buying was "a rush before the Oct 1 deadline with regard to the LVR policy implementation."

Other Quotes

"Sure, September’s REINZ data, published this morning, still looked hot to trot, with sales up 18.9% on a year ago and the Stratified Price Index running at 9.8% annually. Certainly houses sold fast in September, with the days to sell falling to 31, its lowest reading for a September since 2006."

"However, it’s important to note these results are inherently lagged and almost surely include a rush to beat the perceived 1 October deadline with regard to the LVR policy implementation. October’s housing data will be the first real test (starting with Barfoot’s set in the first week of November)."

"One way or another, house prices will come to heel. How so? Well it helps that the RBNZ is now making it clear it won’t be happy until this is achieved (having earlier seemed tolerant of house price inflation, so long as it didn’t spill over into CPI inflation). And that the RBNZ will do whatever is necessary to achieve that outcome."

"We reiterate; we are not at all anti the macro-prudential framework, even implementation of the LVR restrictions. It’s more that we feel the RBNZ has rushed these policies into play without being sufficiently clear about thresholds for intervention, what, exactly, it’s trying to achieve with these new tools and, particularly, how it’s all supposed to fit with orthodox monetary policy."

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