New Zealand regional house prices and macroeconomic shocks

A two-part SVAR model for New Zealand (NZ) identifies impacts of common macroeconomic shocks on national and regional city house prices. Results suggest that NZ regional housing market asymmetries exist in terms of responses to, as well as the relative importance of, shocks to key macroeconomic variables. Interest rate and GDP shocks in particular have significant effects on national and city house prices some 5 years later, although responses to the range of identical shocks vary in magnitude and relative importance across cities. This implies that national policies enacted to dampen/stimulate economic activity will impact differently on regional housing markets.