NZ's Home Prices Fall At Slowest Pace In May

Source : The Business Times, June 9, 2009

(WELLINGTON) New Zealand house prices fell in May at the slowest pace this year, signalling the housing market may soon pick up and help the economy recover from a recession.

Average prices dropped 8.1 per cent from a year earlier, Quotable Value New Zealand Ltd, the government valuation agency, said in an e-mail report. The annual decline is the smallest since December.

Reserve Bank governor Alan Bollard cut the benchmark interest rate to a record-low 2.5 per cent in late April to help kick-start the economy, which is in its worst recession in more than three decades. House sales and home-building approvals are rising as consumer confidence in the housing market improves.

'The wider market is moving toward some form of equilibrium,' said Quotable Value spokeswoman Glenda Whitehead. 'The recent buoyant activity has been fuelled by people taking advantage of lower mortgage rates.' More consumers are inspecting properties and making offers, Ms Whitehead said. A lack of new listings is helping to underpin prices, she said.

A net 46 per cent of people surveyed in April said it was a good time to buy a house, ASB Bank Ltd said in a report last week. The net figure, which subtracts pessimists from optimists, has risen from 38 per cent in January.

New Zealand house prices began falling in July last year amid the global credit crunch and plunging consumer confidence. House sales fell to a record low in January and prices in March were 9.3 per cent lower than a year earlier.

Rising unemployment and tighter lending criteria from banks will slow the recovery in house prices, Ms Whitehead said. The government last week forecast the jobless rate would rise to 8 per cent by early 2010 from 5 per cent in the first quarter of this year. -- Bloomberg