New Zealand home sales hit 12-month high

Country: New Zealand

13 March 2009

The number of homes sold in New Zealand rose to a 12-month high of 5,228 units last month, indicating that low interest rates and depreciating property prices are driving demand for property in New Zealand.

Data from the Auckland-based Real Estate Institute of New Zealand Inc. said that sales had risen from a record-low of 3,706 in January.

Variable mortgage interest rates are at a seven-year low because Reserve Bank Governor Alan Bollard has cut borrowing costs by 4.75% since July to kick-start the economy.

Although encouraged by cheaper borrowing costs and falling New Zealand property prices, consumer confidence is still relatively low due to the recession and rising unemployment.

“While large declines in the mortgage rate have prevented housing demand falling further, the level of house sales remains weak,” said Jane Turner, an economist at ASB Bank Ltd. in Auckland. “Current economic uncertainties and reduced job security will weigh on investment decisions and will continue to curb interest in the housing market despite below average mortgage rates.”

The study also shows that it now takes an average of 62 days to sell a home in New Zealand, up from 50 days a year earlier and 59 days in January, which suggests that buyers are being more cautious and biding their time in what is a largely oversupplied market.

The average price of a property in New Zealand now stands at NZ$330,000 (£123,000), up from NZ$325,000 (£121,195) in January. However, prices fell 2.2% year-on-year.

See Also: New Zealand

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