N.Z. House Prices Rise at Slowest Pace in Three Years
New Zealand's house prices rose at the slowest pace in three years in February as higher interest rates curbed demand for property.
Prices climbed 7.7 percent in February from a year earlier, Quotable Value New Zealand Ltd., the government valuation agency, said in a report released in Wellington today. That's the slowest pace since the monthly series began in February 2005.
Reserve Bank of New Zealand Governor Alan Bollard said last week the benchmark interest rate needed to stay at a record high 8.25 percent “for some significant time.'' The central bank cut its forecast for economic growth this year to 2 percent, citing a faster-than-expected decline in housing.
“We expect house prices will fall 10 percent this year,'' said Craig Ebert, senior markets economist at Bank of New Zealand Ltd. in Wellington. “The economy will slow a bit more than the Reserve Bank thinks, and that will start to bring a monetary easing on to the table.''
The central bank expects house prices will fall as much as 3.9 percent this year.
Bollard last week left the official cash rate unchanged. He said banks were facing rising cost of capital in global markets and were raising home-loan interest rates, which would curb the housing market this year payday loans in one hour.
ANZ National Bank Ltd., the nation's largest lender, last month raised the yield on two-year mortgages to 9.7 percent from 9.5 percent.
Home-Loan Rates
“Banks have lifted their mortgage rates, properties are staying on the market longer and the volume of sales is dropping,'' said Blue Hancock, a Quotable Value spokesman. “It looks like we may be in for a sustained period of less activity in the property market.''
Ebert said anecdotes from the Auckland market suggest prices may already be falling, and this hasn't been captured by the Quotable Value index, which has a long lag.
Barfoot and Thompson Ltd., Auckland's largest realtor, last week said prices in Auckland fell in 4.3 percent in February from January.
Nationally, the number of house sales in January slumped 31 percent to a seven-year low, according to Real Estate Institute figures. The median time it took to sell a house jumped to 49 days from 38 days a year earlier, the institute said.
Filed under: term by Guru