NZ December house prices, sales down

WELLINGTON: New Zealand house prices and sales fell in December, offering another sign of a slow economic recovery and reaffirming expectations that rates will be on hold for months to come.

The Real Estate Institute of NZ's (REINZ) house price index fell 0.6% on the previous month, and was 1.6% lower than a year earlier.

The data also showed the median house sale price fell 2.2% to NZ$352,000 (RM830,375.69) from November and a year ago.

Sales by the industry group's members fell to 4,397 from 5,138, down 14.4% from a month ago and 11.3% from a year ago.

"December sales volumes are always subject to the timing and impact of the great New Zealand Christmas shut down," REINZ chief executive Helen O'Sullivan said in a statement.

The number of days to sell a house was unchanged at 43 days.

She said January's figures would provide a better picture of market activity over the summer period.

The New Zealand dollar was unmoved around US$0.7720 (RM2.36) after the data.

The housing market, once a key inflation worry for the central bank, slowed sharply in 2009 but a slight recovery stalled mid-2010 amid weak consumption, slow wage growth and an uncertain economic outlook.

Philip Borkin, an economist at Goldman Sachs, said when seasonally adjusted the number of sales had increased over recent months, while house prices remained under pressure and were not expected to stabilise until the middle of 2011.

"[The data] suggests the housing market, at least on a turnover basis, may have formed a base after a dire run over the middle part of last year," Borkin said.

"We continue to believe the central bank can afford to hold off until September to begin tightening again."

The latest Reuters poll has 15 of 20 analysts expecting the first interest rate hike in June or later, while four pick some time within the second quarter, and one opts for March.

A separate survey from property valuer Quotable Value (QV) this month showed residential house prices were down 0.9% in the year to December.

The government agency also said there was no sign of any near-term turnaround because of the sluggish economy.

The Reserve Bank of New Zealand, which last month kept its cash rate at 3%, expects near-term weakness in the housing market. — Reuters