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NZ home prices expected to keep rising this year

Buyers spurred by low interest rates face shortage of homes, which is fuelling trend

PUBLISHED : Wednesday, 27 February, 2013, 12:00am
UPDATED : Wednesday, 27 February, 2013, 5:04am

Most New Zealand consumers expect house prices to rise in the next 12 months as buyers spurred by low interest rates face a shortage of properties.

Sixty-six per cent of respondents in a survey last month expected values to increase over the next year compared with 64 per cent in October, ASB Bank said in an e-mailed report. The proportion expecting lower prices was unchanged at 8 per cent.

"Listings remain low and have not kept up with the modest increase in demand," Auckland-based ASB Chief Economist Nick Tuffley said in the report. "Housing inventory levels have fallen sharply and the market is tilted in favour of sellers."

The Reserve Bank of New Zealand is considering ways to contain the nation's overheating housing market, Governor Graeme Wheeler said as the official cash rate remains at a record-low 2.5 per cent.

Thirty-two per cent of respondents expect higher borrowing costs over the next year and 39 per cent predict no change, the survey showed.

Tuffley is among nine economists who forecast the central bank will maintain the current cash rate until at least the end of the year, according to a survey of 16 analysts by Bloomberg last week. Seven predict a rate rise by then.

House prices rose 7.2 per cent last month from a year earlier, the Real Estate Institute said.

In Auckland, home to a third of the nation's 4.4 million people, values surged 11.8 per cent amid a shortage of new listings.