WELLINGTON: New Zealand house price growth fell in May, the first reversal in 14 months, as buyer confidence slipped on uncertainty over property tax and interest rates, government agency Quotable Value (QV) said on May 9.
QV's residential house price index rose 5.6 percent in the year to May, slowing from a 6.1 percent rise in April, and were 4.1 percent below their peak in late 2007.
The government agency said more properties for sale and fewer buyers as well as uncertainty over the future tax treatment of property was behind the downturn.
"We expect the general lack of buyer confidence and low sales turnover to continue to put downward pressure on prices in the short term," said QV Research Director Jonno Ingerson.
In its May 20 budget, the government clamped down on the favourable tax treatment enjoyed by rental property, although the changes were not as bad as had been feared.
"While the changes to tax treatment of investment property may have some downward impact on the lower value end of the market in some areas, it is unlikely that the changes will cause prices to drop across the board," Ingerson said.
The housing market, once a major inflation concern for the Reserve Bank of New Zealand, had been steadily recovering after a sharp downturn during the country's prolonged recession.
However, expectations of higher interest rates, government tax changes and new listings to the market all contributed to the dampening of activity over the past few months.
The national average sale price in May fell 0.5 percent to NZ$403,070 ($266,934), matching the fall seen in April.
House prices in Auckland, the New Zealand's biggest city, were 8.8 percent higher compared with 9.5 percent in April while prices in the capital, Wellington, were up 6 percent from the previous month's 7.1 percent gain.
The monthly residential price report is based on sale prices of properties over the past three months compared with sales over the same period a year earlier- Reuters