ANZ New Zealand's economists have warned a housing market slowdown is emerging as buyer demand fades.
"Buyer demand has faded as the year has progressed, with sales volumes trending down across all regions and average nationwide house prices now inching lower," the bank's economists say in their latest Property Focus report.
They point the finger at rising interest rates as the main culprit, although election uncertainty and broader economic factors have also contributed, the report says. ANZ NZ is the country's biggest housing lender, with total loans of nearly $118 billion as of June 30.
The ANZ economists are expecting interest rates to keep rising.
"Renewed global inflation pressures are now adding to the pressure [on the Reserve Bank] to hike [the Official Cash Rate]," the report says.
"We expect the Reserve Bank to deliver three more 25 basis point hikes, taking the OCR to 3.5%," it says.
The report says the biggest change in the housing market this year has been a reduction in buyer activity.
"The clearest shift in the housing market this year has been falling sales volumes, showing buyers have steadily stepped back as the year has gone on," it says.
"Declines have occurred across all regions of New Zealand."
The report says that although house price movements have stayed close to flat, there are signs the reduction in demand from buyers is starting to affect prices.
"Average nationwide house prices are falling at a rate of roughly 0.5% per quarter," the report says.
"We expect that further small declines from here will put average nationwide prices at the end of 2026 around 1% lower than they started the year."
The report also says that other indicators suggest some market weakness.
"Inventories of unsold stock on the market have been rising across most regions," it says.
"Days to sell have lengthened after a long period of stability.
"Likewise, the seasonally adjusted auction clearance rate suggests flat or slightly falling prices in the near term," the report says.
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