New Zealand house prices take first tumble for five months

PUBLISHED : Wednesday, 10 July, 2013, 12:00am
UPDATED : Wednesday, 10 July, 2013, 2:43am

New Zealand house prices fell slightly in June, the first slip in five months, while the number of houses sold also fell, according to the Real Estate Institute of NZ.

The REINZ's house price index fell 0.03 per cent from May to be 8.4 per cent higher than the same month last year.

The housing market has picked up since early last year, particularly in major cities Auckland and Christchurch, with mortgage rates at multi-decade lows and a moderately improving economy. REINZ said yesterday the strong rises in the two cities were still driving the national property market, but the number of listings was not responding to the demand and higher prices.

"Normally we would expect the number of listings to increase more rapidly coming out of a downturn, but as yet, this does not appear to be happening," said REINZ director Bryan Thomson.

The Reserve Bank of New Zealand has voiced its concerns several times this year about the strength of the housing market, and the threat it poses to financial stability.

The bank is finalising a group of macroprudential measures, including limits on low-deposit lending, capital buffers, and increased reserves to help control house prices.

The central bank said last month that it does not want to raise its official cash rate at this stage to tackle the stronger housing market because of the likely impact on the elevated currency.

The RBNZ has held the official cash rate at a record low 2.5 percent for two years and has said it expects to hold it at that level for the rest of this year.