Asia-Pacific: The Week Ahead (Sept 16-20), New Zealand – Trudging Slowly Over Low Growth

However, he added that business confidence weakness “remains a risk to investment and hiring.”

Economic Calendar

Meanwhile, economic releases in the week ahead get underway Monday with fresh housing sales figures from the Real Estate Institute of New Zealand (REINZ), as well as an updated gauge on consumer confidence.

Monday, Sept 16

  • Real Estate Institute of New Zealand (REINZ) House Sales (Aug)
  • Westpac McDermott Miller Consumer Confidence Index (Q3)

Housing

While the housing sector has softened over recent months – stirring some jitters about the prospects for household spending — home sales had picked up in July, according to REINZ, with a 3.7% year-on-year increase in residential properties.

The number of homes sold rose to 6,118 (up from 5,897), the highest for the month of July in three years. Furthermore, median house prices across New Zealand climbed 4.5% in July to $575,000, up from $550,000 in the same year-ago month – in line with the REINZ House Price Index (HPI), which saw property values increase 1.5% annually.

Bindi Norwell, REINZ chief executive, said that this is “the first time in eight months that we’ve seen the number of properties sold around the country increase on an annual basis suggesting that we’re starting to see some early signs of growth.”

Norwell attributed some of the activity to “more certainty post the removal of the Capital Gains Tax, but it’s also about pockets of renewed confidence and parts of the market finding its new normal in terms of pricing.”

She also waxed optimistic about the sector, adding that with August’s “surprise” 50 bps drop in the OCR, “going forward we expect to see even more signs of growth – especially as we move towards the warmer weather when we tend to see more activity in the market.”

(Click on image to enlarge)

Consumer Confidence

However, the overall softness in the housing sector appears to have contributed to the broader, risk-averse sentiment that seems to have seeped into an already downbeat economic backdrop.

The negative tone was reflected in the latest Westpac McDermott Miller Consumer Confidence survey, which fell 0.3 points in June to a level of 103.5. Although the decrease was relatively small, it had deepened an already sour mood and left confidence well below average levels.

Westpac senior economist Satish Ranchhod noted that the continued slide in household confidence
“follows a more general cooling in the economy over the past year, and households are feeling it. In fact, in annual terms, per-capita GDP growth has now fallen to its slowest pace since 2011, and it effectively stalled through the back half of last year.”

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The author does not hold any positions in the financial instruments referenced in the materials provided.

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