(Bloomberg) -- New Zealand house prices fell for a ninth straight month in November as concerns about the sluggish economy and rising unemployment outweighed the impact of falling interest rates.
Values fell 0.4% from October, property consultancy CoreLogic New Zealand said Thursday in Wellington. From a year earlier, prices dropped 3.5% compared to a 2.2% annual decline in the previous month.
Last week, the Reserve Bank delivered a second straight 50-basis-point rate cut and signaled a third is likely at its next meeting in February. While that has triggered a reduction in borrowing costs for buyers, it hasn’t ignited any bounce in property prices amid the economic gloom.
“The ability of lower mortgage rates to kick start housing market sentiment shouldn’t be underestimated,” said Kelvin Davidson, chief property economist at CoreLogic New Zealand. “But there are several factors pushing in the other direction at present, such as the overhang of available listings and the weak labor market.”
The average two-year mortgage rate fell to 5.69% in October from a peak of 7.01% in November last year, according to central bank data.
The RBNZ last week projected the economy was in recession in the second and third quarters of 2024 and will recover only modestly over the next six months. It expects the jobless rate to rise to 5.2% by mid-2025 from 4.8% currently.
Davidson said prices declined by an average of 0.3% per month from September to November compared with 0.8% a month from April to August, which might signal a floor for values is getting closer.
Still, “although the recent downturn in values may come to an end soon, it won’t necessarily give way to a sharp or sudden upturn,” he said.
The RBNZ last week projected house prices will rise 7.1% in 2025 and Davidson said he agreed with that assessment.
©2024 Bloomberg L.P.
