New Zealand’s April House Prices Fall 9.2% From Year Earlier

By Tracy Withers

May 11 (Bloomberg) -- New Zealand house prices fell for the 10th straight month in April as a deepening recession and falling employment deterred buyers from the market.

Average prices dropped 9.2 percent from the year earlier month, Quotable Value New Zealand Ltd., the government valuation agency, said in an e-mailed report.

Employment slumped 1 percent in the first quarter, the most in almost a decade, adding to signs that New Zealand’s recession is likely to extend for at least a sixth quarter. As job losses mount, consumers and investors have become unwilling to borrow to buy homes.

“The threat of rising unemployment may affect an increasing number of home owners and potential home buyers,” said Blue Hancock, a spokesman for Quotable Value. “We expect values to remain relatively flat over the winter months.”

Property values have fallen about 9.6 percent since their peak in January 2008, Hancock said.

Reserve Bank Governor Alan Bollard has cut the official cash rate by 5.25 percentage points to a record-low 2.5 percent since July to bolster demand. Last month, he said he was unlikely to raise the rate until late 2010.

Lower borrowing costs and cheaper properties have encouraged some buyers into the market, said Hancock. House sales rose in March to a 16-month high, the Real Estate Institute said last month.

Home prices fell 9 percent in Auckland and 8.5 percent in Wellington. Prices across the nation’s 17 main urban centers dropped an average 9 percent.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.