New Zealand House Prices Climb for Fifth Month, Led by Cities
New Zealand house prices climbed for a fifth month in February, fueled by increased demand for property in the nation’s largest cities as the economy emerges from a recession.
Prices rose 5.5 percent from a year earlier, following a 4.4 percent annual gain in January, according to a Quotable Value New Zealand Ltd. index. Prices in the 17 largest cities rose 7.3 percent, the Wellington-based government valuation agency said in an e-mailed report.
Further gains in house prices may be curbed by the prospect of higher interest rates and changes to taxation of investment property that will be announced in the May 20 budget. Prices in rural areas fell in February and the pace of increases in provincial cities and some urban areas is slowing, said Glenda Whitehead, valuation manager at Quotable Value.
“Values in the last few months have flattened in many areas,” she said. “The market remains patchy and buyers cautious.”
Reserve Bank Governor Alan Bollard said on Jan. 28 he expected to raise the official cash rate from a record-low 2.5 percent around the middle of the year.
Property sales and listings of houses for sale improved in February as the market approaches its busiest time of the year in late summer, Whitehead said.
“We expect values to stabilize over the coming months, reflecting the ongoing uncertainty around employment, pending interest-rate rises and continued tight lending criteria,” she said. “We may see more certainty in the market after the budget announcement.”
Unemployment
Damping consumer confidence, New Zealand’s jobless rate rose to a 10-year high of 7.3 percent in the fourth quarter. Banks are taking a careful approach to lending and are requesting fresh valuations where the borrower has a low deposit, Whitehead said.
The number of home-loan approvals in the three months ended Feb. 26 slumped 20 percent from a year earlier, according to central bank figures published March 3.
A separate report prepared by the Real Estate Institute last month said that house prices fell for a second month in January. The institute releases February figures on March 12.