(Bloomberg) -- New Zealand house prices fell for a sixth straight month in August, weighed down by elevated interest rates and uncertainty over job security in a weakening economy, according to CoreLogic Inc.
Values dropped 0.5% from July, when they declined a revised 1%, the property consultancy said Thursday in Wellington. Prices rose 0.7% in August from a year earlier, slowing from a 2.2% pace.
Property prices have mirrored a slump in confidence among buyers as the economy cools and rising unemployment begins to impact household incomes. Some optimism may re-emerge after the Reserve Bank cut interest rates in mid-August and signaled further easing ahead.
“No doubt many households will be feeling happier now that the Official Cash Rate is falling and mortgage rates are headed lower too,” said Kelvin Davidson, chief property economist at CoreLogic New Zealand. “Yet the latest fall in values is a timely reminder that the market still faces considerable challenges too.”
The average two-year mortgage rate slid below 6% following the RBNZ’s rate cut. That’s down from a peak of 7.01% in November last year, according to central bank data.
Most local bank economists expect house prices will climb by no more than 1% this year, with stronger increases then seen in 2025. Davidson agrees that the outlook is subdued.
Housing affordability is stretched and the labor market is turning down, which will dent buyer enthusiasm, he said. As well, the stock of available properties is at multi-year highs.
“This all adds up to likely further restraint on property values in the coming months, although the potential impact of lower mortgage rates cannot be ignored,” he said. “A fresh property boom is not our central expectation.”
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