ANZ chief economist Cameron Bagrie
The number of houses sold over the last few months has increased, but selling prices have remained static. Accompanying the increase in house sales, is a strengthening in both building approvals and mortgage approvals, a timelier indication of where the market is heading. All these point to a market which is slowly building momentum, albeit off a low base, and in the face of weak immigration.
Residential building consents increased by a seasonally adjusted eight percent in May, reaching their highest level since January. Mortgage approvals lifted to a six-week high in mid-July. The number of mortgage approvals was 3.1 percent below a year ago, but the comparable figure for the value of mortgages is 14 percent higher compared with a year ago.
The number of house sales has been trended upward, and were 14 percent above the same month a year ago. Prices lifted by 2.8 percent in seasonally adjusted terms in the month.
The RBNZ voted once again to leave the Official Cash Rate at 2.5 percent, with mortgage rates remaining mostly unchanged for the longest length of time since 1992.
New Zealand is now emerging as one of the few developed economies set to post above-trend growth over the next few years. The New Zealand economy is currently navigating a number of large shocks simultaneously – debt payback, the Christchurch earthquakes and high commodity prices.
The start to economic growth in 2011 looks better than we thought it might, and the second half of the year looks strong, as improving confidence translates into actual activity. Next year there is expected to be four percent + growth in the economy as the Christchurch rebuild kicks into gear.