Thursday, April 9, 2009

How long can you hold your house prices, Australia?

Saw a news earlier today Titled “New Zealand’s March House Prices Fall 9.3% From Year Earlier” What a shocking news! How long can you hold your house prices, Australia?

New Zealand house prices fell 9.3 percent in March from a year earlier as a deepening recession and rising unemployment deterred buyers.

The drop in average prices was the biggest since the series began in 2005, Quotable Value New Zealand Ltd., the Wellington- based government valuation agency, said in an e-mailed report. Prices have been declining since July.

Buyers are cautious amid forecasts New Zealand’s recession may be prolonged until 2010 and the jobless rate may surge to an 11-year high of 7.2 percent by early next year. Falling property prices add to signs consumer confidence and spending will remain weak and central bank Governor Alan Bollard will cut interest rates again this month.

“There remains widespread uncertainty over what the coming months may bring,” said Blue Hancock, a spokesman for Quotable Value. “The extent to which broader economic factors, particularly job security, will affect the property market remains unclear.”

New Zealand’s economy is in its worst recession in more than three decades and may not start growing until the first quarter of 2010, the Treasury Department said this week. Most workers say their job is less secure, according to a survey by Westpac banking Corp. and McDermott Miller Ltd.

Seven of 13 economists surveyed by Bloomberg News expect Bollard will respond to falling business confidence and a weak property market by cutting the official cash rate by a half- point to 2.5 percent on April 30. Six forecast a quarter-point reduction.

Auckland Worst-Hit

Lower interest rates may spark demand for homes. Fifty- three percent of 600 people surveyed in February by ASB Bank Ltd. said it is a good time to buy property compared with 45 percent in the previous survey in November.

“Our valuers are reporting increased buyer activity with more people attending open homes and more sales occurring,” Hancock said.

The biggest price declines are in Auckland, the nation’s biggest city, region, where they fell 10.1 percent from a year earlier. Prices are stabilizing in other areas, Hancock said. Prices in Wellington fell 8.7 percent from a year earlier, less than the 9.3 percent drop in February.

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