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    NZ: Housing heat radiating – BNZ Sandeep Kanihama

    Craig Ebert, Senior Economist at BNZ, notes that the NZ’s Real Estate Institute (REINZ) published its residential results for May this morning and they were strong, overall.Key Quotes“Granted, their nationwide sales number, of 9,075, inferred a 2.5% fall in seasonally adjusted terms. However, this followed gains of 8.1% and 12.4% in March and April respectively. Compared to a year ago May’s sales were up 13.6%. And their seasonally adjusted level remained a pointer to annual house price inflation running firmly in the teens.It was little surprise, then, to see house price inflation continuing to strengthen. The (quality-adjusted) Stratified Index rose 2.1% in May, lifting its annual rate of inflation to 14.7%, from 14.5%. Even the median sale price, which has been running relatively slower of late, perked up to 10% y/y. This meant it broke new level territory, as in above the half million dollar mark (with $506,000).In any case, all the news now is about how housing markets outside of Auckland are ramping up. The increasing, and broadening, house price inflation might, in the least, make the RBNZ cautious about cutting the OCR any further. More to the point, it probably makes even-tighter LVR restrictions something to watch for over the coming months, perhaps targeted at local investors (but with the talked-about debt-to-income controls needing a lot more time before they might be practically implemented, if at all).”


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