New Zealand house prices hit 30-month low as buyers hold back
Economists and the RBNZ expect the jobless gauge has peaked, which will feed into rising wages later this year
[WELLINGTON] New Zealand house prices fell for a second straight month in January, hitting a two-and-a-half year low as buyers stay on the sidelines until they are more assured about the economic recovery.
Prices fell 0.1 per cent from December, when they dropped 0.2 per cent, property consultancy Cotality said on Thursday (Feb 5) in Wellington, citing its home value index. From a year earlier, the gauge fell 1 per cent, taking it to the lowest since July 2023.
Optimism about property prices has been fanned by a drop in interest rates and initial signs of the economic recovery that is needed to boost employment and give households certainty about their future incomes. Until that happens, buyers are prepared to delay purchases, particularly as there is a flood of available houses on the market.
“There’s still a good stock of listings out there for buyers to choose from and a cautious attitude persists, especially as the recovering economy has yet to improve job security and employment levels,” said Kelvin Davidson, chief property economist at Cotality in Wellington. “The net result is that buyers aren’t in a rush to bid up prices, although vendors aren’t generally having to drop their expectations much either.”
January, like December, is a relatively quieter month in the real estate industry because of summer vacations.
The Reserve Bank of New Zealand (RBNZ) in November cut the Official Cash Rate to 2.25 per cent, down 325 basis points since July 2024, but investors are betting the next move will be up, most likely before the end of this year. Accordingly, mortgage interest rates edged higher in December after reaching their lowest in more than three years in November.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
A report yesterday showed the first increase in employment in 18 months, but the jobless rate rose because more people were seeking work than were able to be hired. Economists and the RBNZ expect the jobless gauge has peaked, which will feed into rising wages later this year.
In turn that will help stoke modest increases in house prices, Davidson said.
“Most expectations are for sales activity to continue to rise this year, bringing down the stock of unsold listings and contributing to rising house prices,” he said. “Lower interest rates, a growing economy and the likelihood of gradually falling unemployment are key factors underpinning that outlook.” BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
