Monday, June 9, 2008

New Zealand house prices still falling

New Zealand house prices rose by 2.4 percent in the year to May, down from 4.9 percent in the year to April, Quotable Value said today in its monthly report.

"There are increasing reports that, where sellers aren't under financial pressure or needing to relocate, they are choosing to take their properties off the market or rent them out rather than accept lower offers," QV's Mark Dow said.

"Both our preliminary statistics and feedback from our valuers in the field suggest that this decline [in prices] is set to continue for some time yet."

Just how low will they go? Last week, the Reserve Bank forecast a fall in house prices of 13 percent, or 22 percent adjusted for inflation, from their peak last year. But perhaps we should look back to 1970s for an indication of what might happen. After the first oil shock in 1973, real house prices fell 38 percent.

QV said that in May the average house price in New Zealand fell by about $1000 to $387,299.

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