New Zealand house sales rise to new high

Bloomberg

Variable home-loan interest rates are at a seven-year low because Reserve Bank Governor Alan Bollard has cut borrowing costs by 5.25 percentage points since July to kick-start the economy. Cheaper debt and falling house prices have made property more affordable for consumers, and realtors are receiving more enquiries, the institute said."Potential house buyers look to be slowly heading back in, after standing on the sidelines waiting for the lows in mortgage rates and house prices to be reached," said Nick Tuffley, chief economist at ASB Bank in Auckland. "Housing turnover is likely to have now bottomed out and a small recovery is likely to be underway over 2009."Still, consumers may need more convincing to buy houses amid a prolonged recession and rising unemployment.

ASB Bank expects New Zealand’s jobless rate will rise to a 13-year high of 8 percent this year as a global recession curbs exports and stalls business investment. New Zealand has been in a recession since the first quarter last year."The overall level of demand remains weak and construction activity is likely to continue to fall for a few more months yet," said Tuffley.Home sales rose 30.5 percent from a year earlier.

That’s the first annual increase since April 2007. Still, sales were 39 percent less than in March 2007.