REINZ housing data for October was extremely weak.
House sales fell 7.2%, and prices fell 4.2% – the biggest single-month price decline on record. Days to sell a house lengthened.
Part of the national price decline was a reversal of odd-looking price increase in Christchurch in September. However, this cannot explain all of the weakness.
Decline in Auckland
The weakest region was Auckland, where sales fell 15% and prices were down 4.7% (after very strong price growth in September).
This is important hard data to back the stream of negative anecdotes surrounding the Auckland housing market over the past month or so.
The drop in Auckland sales was not a surprise – the market was probably subject to a rush of turnover ahead of tax changes that came into force on October 1, 2015.
More surprising was the large decline in prices in Auckland. A single month of data must always be treated with caution, but we are now watching this space carefully.
A sharp slowdown in the Auckland housing market has long been a crucial element of our forecast that the OCR will fall to 2.0%.
