New Zealand house prices fall at slower pace after rate cut
NEW Zealand house prices fell for a seventh straight month in September but at a slower pace, following an interest rate cut from the central bank, CoreLogic said.
Values fell 0.5 per cent from August, when they dropped a revised 0.8 per cent, the property consultancy said on Thursday (Oct 3) in Wellington. That is the smallest monthly decline since April.
Property prices have reflected a slump in confidence among buyers as the economy cools and rising unemployment begins to impact household incomes. Some optimism is emerging after the Reserve Bank of New Zealand (RBNZ) cut rates Aug 14 and signalled further easing before the end of the year.
“There are signs that lower mortgage rates have started to boost sentiment in the housing market,” said Kelvin Davidson, chief property economist at CoreLogic New Zealand. “The trough for this latest episode of falling values may not be far away, but I’d be cautious of assuming the end of a downturn suddenly means the start of the next upturn.”
Houses still remain expensive relative to incomes, there is a large stock of listings and the labour market is weak, he said.
The average two-year mortgage rate slid below 6 per cent following the RBNZ’s rate cut. That is down from a peak of 7.01 per cent in November last year, according to central bank data.
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The RBNZ reviews the official cash rate on Oct 9, with a number of economists tipping a half-point cut – taking the benchmark to 4.75 per cent – which would put further downward pressure on home-loan rates.
From a year earlier, house prices dropped 1.2 per cent – the first annual decline in 11 months – the data showed.
Davidson said the market is likely to be subdued over the final months of 2024.
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“The recent drop in values might find a floor over the coming months but at the same time, it’s difficult to see a sharp turnaround,” he said. “The scene looks set for a rise in sales volumes and house prices in 2025 to some degree, but a full-blown ‘sellers’ market’ seems unlikely as long as the economy remains weak.” BLOOMBERG
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