New Zealand house prices fell 6.8 percent in November from a year earlier as an economic recession and a deepening global financial crisis deterred buyers.
The drop in average prices matched October’s decline, which was the biggest since the series began in 2005, Quotable Value New Zealand Ltd., the Wellington-based government valuation agency, said in an e-mailed report today. It was the first time in 15 months that the annual change hasn’t deteriorated.
Falling property prices add to signs the economy’s slump will be prolonged as stricter lending conditions and rising unemployment erode household confidence. Central bank Governor Alan Bollard, who has cut the benchmark interest rate by 3.25 percentage points since July to kick-start demand, urged lenders last week to pass on lower borrowing costs to consumers.
“It’s too soon to be talking about the housing market stabilizing,” said Nick Tuffley, chief economist at ASB Bank Ltd. in Auckland. “In November and December the market is going to soften further rather than improve.”
Some home-lending rates have fallen to the lowest in four years which is good news for those refinancing debt, Tuffley said. Still, 85 percent of New Zealand home loans are fixed and don’t immediately benefit from lower lending rates.
“Rates have been falling since May but there is no sign of a pick up in lending,” he said.
Potential home buyers are “taking a wait and see approach. They are hearing a lot of bad news about the economy and they are worried about job security,” he said.
Deposit Requirements
Home lenders including ANZ National Bank Ltd., the nation’s largest, require first-time buyers have a deposit of at least 20 percent of the purchase price a property, according to media reports.
Bollard last week said the economy may be emerging from recession, though faces a “shallow” recovery over the next six months. He couldn’t rule out further contraction in gross domestic product if the global outlook deteriorates.
The central bank forecasts house prices will slump 16 percent in the three years to the end of 2010. It also expects the jobless rate will rise to 6 percent by the end of 2009 from 4.2 percent in the third quarter.
The average sale price for November declined to NZ$375,408 ($200,073), according to today’s report.
Home prices in Auckland fell 7.4 percent and in Wellington by 6 percent, today’s report showed. Prices across the nation’s 17 main urban centers dropped an average 7.2 percent.
Adelaide