House prices predicted to decline
The Reserve Bank's view that house prices will decline are starting to show through in monthly data from Quotable Value. "We are projecting a sharp decline in house price inflation over the coming years, comparable to the recent housing market slowdown in Australia," the bank said in its Monetary Policy Statement last week.
Sunday, June 11th 2006, 12:00AM
by The Landlord
"Relatively low net immigration and rising effective mortgage rates will continue to weigh on residential investment. Furthermore, low rental yields may make property investment a much less attractive option once capital gains have slowed."
Figures from QV today show that annual house price inflation abated for the fourth consecutive month, although it is still in double digits.
They show the average national house price was up 12.4% in May, down from 13.1% in April and considerably cooler than the 16.8% increase chalked up in January when the figures peaked.
"The most recent market activity suggests there is no longer the urgent pressure on buyers and prices are stabilising. This trend is expected to continue throughout the winter months," QV spokesman Blue Hancock says.
Inflation is abating in all the major cities with the average annual growth in the Auckland region 9.8% in May, down from 11% in April, in Wellington 13.6%, down from 13.7%, Hamilton 21.5%, down from 23.9%, Christchurch 12.7%, down from 13.8%, and Dunedin 8.2%, down from 10.4%.
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