1. Job concerns still seem to be trumping lower interest rates
CoreLogic’s latest house price figures, covering October, showed a further drop (0.5%) in national values; the eighth in a row, taking the total fall since February to 5.1%. Wellington underperformed, as did Auckland and Hamilton, whereas Dunedin only dropped by 0.4%, Tauranga was flat, and Christchurch edged slightly higher.
For now, the continued falls in property values suggest that job losses and the wider feelings of insecurity about future employment prospects outweigh the support for house prices coming through from lower mortgage rates. That said, we’re at a very interesting juncture for the market, where the “on the ground” evidence seems to be perking up, but has yet to emphatically hit the hard data. It wouldn’t be a surprise to see property values bottom out shortly.
Even so, the end of a downturn doesn’t necessarily equate to a strong or sudden upturn either. With affordability still stretched, a lot of listings sitting on the market, and probably further job losses in the pipeline, 2025 could still be underwhelming for property sales and house prices.
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2. Filled jobs are flat-lining at best
On that note, Stats NZ has released the latest monthly filled jobs figures, and they showed no change in September, after a similarly flat result in August. At face value, then, the latest results don’t look too bad. But it’s also worth remembering that these figures have a tendency to be revised down in subsequent releases. In addition, despite stability in August and September, the total number of filled jobs is already down by around 31,000 from the peak (March) and 21,000 from a year ago. In other words, more reason to be cautious about housing’s near-term prospects.
3. Yet more employment data this week too
The final word on how the labour market fared in the third quarter of the year will come from Stats NZ on Wednesday. The official/benchmark figures will probably show another rise in the unemployment rate, from 4.6% in Q2 to around the 5% mark (perhaps a touch less) – with an outright fall in employment outweighing a possible drop in the share of people actively in the labour market. If current expectations prove correct, we will likely see another 50 basis point cut in the Official Cash Rate on November 27. For those looking for more, it’d take a huge surprise in the unemployment rate figures (maybe a lift to 5.5% or more) to shift the consensus towards a 75 basis point OCR cut.
CoreLogic chief economist Kelvin Davidson says the market should be cautious "about housing’s near-term prospects". Photo / Peter Meecham
4. Better construction anecdotes seem to be coming true
Last week’s Stats NZ figures showed that the number of new dwellings consented in September was 2% higher than the same month last year – not a major rise, but nevertheless the second increase in the past three months. Since falling below 34,000 in June (from a peak of more than 51,000 in mid-2022), the annual running total has also stabilised at around 33,600. In other words, consistent with the anecdotes we’ve been hearing, it now seems that the worst of the downturn in consents might now be over – and at a much higher level than the troughs we’ve seen in the past. Of course, given the normal lags, it may take a bit longer yet for actual house-building to bottom out, but at least a floor for consents is the first, encouraging step. As also announced last week by the Government, a requirement for fewer council building inspections would also make the process easier.
5. Financial Stability Report might come and go pretty quickly
On Tuesday this week, watch out for the latest six-monthly FSR from the Reserve Bank. It’s an interesting report for stats people like myself, but based on the pre-release last week of a dedicated housing market section from the FSR – which was a good summary of the market but without any major new policy changes or data breakdowns – tomorrow’s full report might not stay in the limelight very long. Of course, that’s probably the whole idea – no surprises!
