Westpac chief economist Dominick Stephens said Auckland house sales in October fell 17% and prices declined 4.4%, while in November sales fell 13% and prices were down 1.9%.
‘‘There can now be no doubting that the erstwhile star market has suffered a fall from grace,'' Mr Stephens said.
Auckland house prices and sales are now lower than they were in July.
Mr Stephens said Westpac's economic commentary had long predicted the interest-driving official cash rate (OCR) would fall to 2.0% in 2016, but first the Auckland market would have to show signs of slowing.
‘‘Now that a housing slowdown is confirmed, we are one step closer to the OCR falling to 2%,'' Mr Stephens said.
‘‘These are very weak [Auckland] numbers indeed, and confirm what the anecdotes have been screaming for the past three months - the Auckland housing market has slowed with a thump,'' he said.
Meanwhile, markets in the rest of New Zealand continued ‘‘to tick along without too much fuss'', he said, quoting seasonally adjusted data from the Real Estate Institute of New Zealand.
While the number of houses sold in Dunedin during November was flat, median prices were up 13% on a year ago, while across Otago sales numbers were similar and median prices were up 9.7%.
Mr Stephens said of particular interest was that Christchurch house prices seemed to be rising again, after remaining essentially unchanged for a long period.‘‘Market turnover ticked a little higher in some regions, a little lower in others,'' he said.
There is mounting anecdotal evidence, from data and commentary from real estate organisations, that investors are coming south in search of better yields from rental properties.
Mr Stephens believed the Auckland market was speculative in nature, and would therefore be particularly impacted by the tax rule changes that took effect on October 1; the restrictions on mortgage lending to Auckland landlords that took effect in November; waning economic confidence; and rising unemployment.
‘‘The added kicker was an apparent withdrawal of foreign buying interest,'' he said.
In the event, the actual downturn had occurred sooner and had been more severe than anticipated, Mr Stephens said.
Experience suggested the regulatory changes, like the the new mortgage lending restrictions, might have a only temporary impact on house prices, he said.
‘‘So we do not expect that Auckland house prices will continue falling at their current pace for much longer. But neither do we anticipate a return for the helter-skelter of earlier this year,'' Mr Stephens said.
