February 14, 2018 / 9:58 PM / a year ago

CORRECTED (OFFICIAL)-UPDATE 1-New Zealand housing market continues recovery in January but headwinds loom

 (Corrects to show reversal from 19 months of falling volumes,
not seven)
    * House prices rise 7 pct annually in Jan - REINZ
    * Sales volumes rise for first time in 19 months
    * Underscores modest post-election recovery though headwinds

    By Charlotte Greenfield
    WELLINGTON, Feb 15 (Reuters) - The New Zealand housing
market posted modest price growth in January and sales volumes
picked up, snapping 19 months of falls, but policy changes could
mean only a slow recovery. 
    Seasonally adjusted median house prices rose 7.0 percent
since January 2017, the Real Estate Institute of New Zealand
(REINZ) said on Thursday. Prices edged up 0.6 percent on a
monthly basis.
    Sales volumes grew for the first time since June 2016 for an
annual rise of 2.7 percent. 
    "In short, housing market activity is well off its lows,
suggesting house price inflation has likely also found a floor
but the market remains much cooler than it has been," said
Sharon Zollner, chief economist at ANZ Bank.
    The market had tapered off from its double-digit growth
around the middle of 2017 as investors were spooked by a the
length of time it took to form a coalition government following
last year's elections. 
    Prices had started to pick back up in November and January
saw some added support from the central bank's decision to wind
back some of its lending restrictions.
    "The general sense from January housing market data is one
of a market that is only gradually recovering," said Jeremy
Couchman, Kiwibank senior economist.
    The outlook for the rest of the year was not quite as rosy.
    The new Labour-led government planned to introduce a number
of restrictions including a ban on most foreign homebuyers, and
widened taxes on investments, which could see the prices
relatively flat over 2018, economists said. 
    "In our view, the market is unlikely to take off again due
to affordability constraints...and new Government policies,"
Zollner said.


 (Reporting by Charlotte Greenfield; Editing by Andrew Heavens)
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