Tough headwinds and greater fall in house prices

Bigger falls are based on a predicted rise of the official cash rate (OCR) to 4%, which will mean higher mortgage interest costs leading to sinking house prices.

ANZ’s latest Property Focus says the second quarter CPI figures suggest high core inflation may stick around longer than previously thought.

The REINZ House Price Index (HPI) has fallen 6.6% from its peak in November last year, with monthly declines ranging between -1.4% and -0.6%. Annual house price inflation in now running at 3.6%, on a three-month moving average basis; that’s more than 25% slower than its recent peak. The bank expects this measure will turn negative in next month.

Meanwhile, indicators of market tightness continue to ease. New listings are back to their typical seasonal pattern, but softening sales mean housing inventories are rising. Inventories are now at a six-year high, and getting higher. Unsurprisingly, the number of days it is taking to sell a house is also higher.