Antipodean Housing Deep Dive

Running out of puff

Each month we take a graphical deep dive into the Antipodean housing markets.

There are no big red flags that give us particular cause for concern in the housing space in either Australia or New Zealand.

Housing price growth in Australia has continued to slow, barely rising over November. Dwelling price weakness remains most pronounced in Melbourne and prices are also edging lower in Sydney. The number of homes for sale in these cities remains somewhat elevated, but there are early signs that the peak could be in as weaker prices discourage selling.

Despite moderate price growth, growth in housing credit has remained quite solid at around a 6% annualised rate. This could be on borrowed time, however, if dwelling price growth remains tepid.

In New Zealand, the rate of decline in housing prices has slowed. Mortgage interest rates have fallen sharply and the related improvement in new mortgage affordability will eventually support rising housing prices.

Home building approvals have picked up off the lows in both Australia and New Zealand. Nevertheless, further near-term weakness in actual home building construction appears likely, particularly in New Zealand.