New Zealand house sales slumped to a seven-year low in March, adding to signs record-high interest rates are cooling the property market and will slow economic growth.
The number of homes sold dropped 53 percent to 5,129 last month from 10,989 a year earlier, according to a report today from the Real Estate Institute of New Zealand Inc. e-mailed to Bloomberg News. Sales were the lowest since January 2001.
Finance Minister Michael Cullen said he couldn't rule out a recession this year because of weakness in the property market, a drought and turmoil on global financial markets. Falling consumer confidence and the weak housing market will prompt Reserve Bank of New Zealand Governor Alan Bollard to cut the benchmark interest rate at 8.25 percent this year, according to 7 of 12 economists surveyed by Bloomberg News.
"We see a risk of house prices dropping by more than the Reserve Bank currently forecasts," said Nick Tuffley, chief economist at ASB Bank Ltd. in Auckland. "There is a glut of supply and the mechanisms to reduce that are weaker prices or sellers withdrawing from the market."
The central bank forecast last month that prices will fall 3.9 percent in the year ending Sept. 30, the first decline in since 2000. Bollard said a "sharp slowdown" in the housing market was spilling over into consumer spending.
Economic growth may slow to 1.7 percent this year from 3.1 percent in 2007, according to a median forecast of 12 economists surveyed by Bloomberg News.
Consumer Confidence
Consumer confidence fell to a 10-year low in the first quarter, according to survey by Westpac Banking Corp. and McDermott Miller Ltd.
"There is no doubt confidence has taken a knock," Murray Cleland, national president of the Real Estate Institute, said in a statement. "The balance of probability is that the property market will weaken in coming months."
A four-day Easter vacation in March may have contributed to the decline in sales, he said.
The median house price rose for the first time in four months in March because sales volumes of high-priced homes didn't drop as much as cheaper houses, Cleland said.
The median price rose to NZ$349,000 ($278,188) from NZ$337,500 in February. Prices gained 1.6 percent from a year earlier.
The median time it took to sell a house was 40 days, compared with 27 days a year earlier and 50 days in February.
The number of homes sold dropped 53 percent to 5,129 last month from 10,989 a year earlier, according to a report today from the Real Estate Institute of New Zealand Inc. e-mailed to Bloomberg News. Sales were the lowest since January 2001.
Finance Minister Michael Cullen said he couldn't rule out a recession this year because of weakness in the property market, a drought and turmoil on global financial markets. Falling consumer confidence and the weak housing market will prompt Reserve Bank of New Zealand Governor Alan Bollard to cut the benchmark interest rate at 8.25 percent this year, according to 7 of 12 economists surveyed by Bloomberg News.
"We see a risk of house prices dropping by more than the Reserve Bank currently forecasts," said Nick Tuffley, chief economist at ASB Bank Ltd. in Auckland. "There is a glut of supply and the mechanisms to reduce that are weaker prices or sellers withdrawing from the market."
The central bank forecast last month that prices will fall 3.9 percent in the year ending Sept. 30, the first decline in since 2000. Bollard said a "sharp slowdown" in the housing market was spilling over into consumer spending.
Economic growth may slow to 1.7 percent this year from 3.1 percent in 2007, according to a median forecast of 12 economists surveyed by Bloomberg News.
Consumer Confidence
Consumer confidence fell to a 10-year low in the first quarter, according to survey by Westpac Banking Corp. and McDermott Miller Ltd.
"There is no doubt confidence has taken a knock," Murray Cleland, national president of the Real Estate Institute, said in a statement. "The balance of probability is that the property market will weaken in coming months."
A four-day Easter vacation in March may have contributed to the decline in sales, he said.
The median house price rose for the first time in four months in March because sales volumes of high-priced homes didn't drop as much as cheaper houses, Cleland said.
The median price rose to NZ$349,000 ($278,188) from NZ$337,500 in February. Prices gained 1.6 percent from a year earlier.
The median time it took to sell a house was 40 days, compared with 27 days a year earlier and 50 days in February.
Bloomberg
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