New Zealand house prices continue recovery - survey

WELLINGTON, Oct 12 - New Zealand house prices recovered in September to be close to levels of a year ago, data showed on Monday, supporting views the economy has emerged from its longest recession in more than 30 years.

Quotable Value's residential house price index fell 1.1 percent in the year to September, compared with a 2.8 percent decline the previous month -- the sixth month in a row the trend in property values has improved.

The government agency said there were signs of more activity in the market with an increase in the number of sales and more listings in many areas.

However the activity is patchy, with some markets much stronger than others, making it harder to estimate national trends, QV spokeswoman Glenda Whitehead said in a statement.

"The market is still clearly in a state of change," she said.

The housing market, once a major inflationary concern for the Reserve Bank of New Zealand (RBNZ), peaked in late 2007, but fell sharply because of high borrowing costs and prices, while consumers cut their spending amid a deepening recession and rising unemployment.

The central bank has slashed interest rates by 575 basis points since July 2008 to combat the downturn, with a Reuters poll forecasting the official cash rate will be held at a record low 2.5 percent until 2010. See [NZ/POLL]

The economy inched out of from recession in the second quarter, posting 0.1 percent growth.

The RBNZ, which previously forecast house prices to fall around 20 percent by early 2010 from their peak, said in its June statement that house price inflation was close to cyclical lows.

Fixed term lending rates for two years or longer have been gradually rising as investors have moved to lock in low rates in the expectation that the RBNZ will start raising rates as soon as early next year.

QV said the average sale price rose 0.7 percent to NZ$387,567 ($287,087) on the previous month.

House prices in Auckland, the biggest population and commercial centre, were 0.6 higher in September from a year ago, compared with a 1.9 percent fall in August, while the capital, Wellington, was up 1.1 percent after a 0.1 percent drop the month before.

Most of the main centres showed higher values than a year ago, while most of the provincial centre were still below September 2008 prices.

The monthly residential price report is based on sale prices of properties over the past three months compared with sales over the corresponding three-month period a year earlier. The data is not seasonally adjusted.

Industry data from the Real Estate Institute of NZ for the month is due on Wednesday. ($1=NZ$1.35)