Talking Points
The New Zealand property market slowed its pace of growth in the third quarter
Residential building cooled overall, but there remain significant hot spots, notably of course Auckland
Kiwi Dollar focus was elsewhere, however
The New Zealand Dollar slid in early trade on Thursday, with market focus squarely on the US Federal Reserve’s interest-rate increase, ignoring domestic data which showed a much slower rise in the value of residential building.
The seasonally adjusted value of home building work was up 4.3% in the third quarter, compared to the second, but well below the 7.4% rise seen then.
The volume of all building activity in the country climbed 1.4%, well below forecasts which had looked for gains of over 2%, and the 5.5% gain seen in the second quarter.
While the data may indicate some cooling in the sector as a whole, the regional picture was very different.
Activity in red-hot property market Auckland still managed to rise 32%, while in Canterbury the gain was just 4%.
Large regional differences in property performance can make a central bank’s job tougher as it must set one interest rate appropriate to them all, and measures have been taken to try and put the brakes on Auckland.
While this survey would seem to offer scant evidence that it is working, more recent events may offer some hope. Local realtors have reportedly said that average house prices in the city fell last month, which may mark a turning point after seven years of gains. The Reserve Bank also said recently that Auckland prices had softened in recent months.
The New Zealand Dollar was steady after the report, but slipped later in the local session as news of the Fed’s action broke.
Fed-focused:NZD/USD
Chart compiled using TradingView
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— Written by David Cottle, DailyFX Research
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