New Zealand House Prices Increase at Slower Pace
New Zealand house prices increased at a slower pace in November and property sales fell for a second month as home-loan interest rates increase.
Prices rose 0.2 percent from October when they gained 1.3 percent, the Auckland-based Real Estate Institute of New Zealand Inc. said today in an e-mailed statement, citing an index. Property sales fell to 6,056.
Reserve Bank Governor Alan Bollard last week said house- price inflation would moderate in 2010, reducing the need for him to raise the benchmark interest rate before the middle of the year. Lenders have increased home-loan interest rates for fixed terms of one year or longer as global funding costs have increased, curbing demand for property.
“No longer do borrowers get the benefit of certainty and low rates that had been a feature of previous cycles,” said Khoon Goh, senior economist at ANZ National Bank Ltd. in Wellington. “The prospect of higher interest rates and a still weak labor market will continue to be major headwinds facing the housing market.”
The interest rate on a two-year home loan was 7.15 percent in October from 6.31 percent in June, according to central bank figures Online payday loans. Bollard on Dec. 10 said he may increase the official cash rate around the middle of 2010.
The jobless rate rose to a nine-year high of 6.5 percent in the third quarter and may reach 6.7 percent next year, the central bank forecast last week.
House Sales
House sales slumped last year amid a deepening recession, and only began rising on an annual basis in March. Sales in November surged 41.5 percent from a year earlier to 6,056, the institute said today.
Still, sales fell for a second month in November from 6,091 in October and 6,464 in September.
The level of sales is consistent with troughs in previous housing downturns, Goh said.
The dip “could hint at the start of an easing in housing market activity at a time when we are getting a supply response with a rise in the number of houses for sale,” he said.
The median time to sell a house rose to 33 days from 31 in October, and fell from 44 days in November last year, the institute said today.