House value growth steadies

The pace of growth in New Zealand house values steadied in September after slowing for seven straight months, a survey released by Quotable Value today showed, potentially adding to the central bank's wariness on inflation risks.

The government agency, known as QV, said its residential house price index rose 10.4 per cent in the September from a year earlier, little changed from the 10.5 per cent increase in August and an 11.1 per cent gain in July.

"There had been predictions that a potential over-supply in housing stock may impact the market, but this appears to be offset by continuing positive levels of net migration," QV spokesman Blue Hancock said in a statement.

"Mortgage rates that are stable or even falling, the feel- good factor of lower petrol prices, along with the normal increase in activity that comes with the spring property market, may keep the market simmering for a while yet."

Last month, Reserve Bank of New Zealand Governor Alan Bollard singled out the housing market's strength as the central bank's main concern for inflation, warning that interest rates may need to be raised to bring down price pressures.

The RBNZ is widely expected to keep rates steady at 7.25 per cent on Oct. 26, but analysts said a rate increase is possible if data in the meantime exceeds expectations.

The pace of growth in house prices has slowed from a peak at 16.8 per cent in January.

Annual growth in house values in the main urban centres was mixed, with the capital Wellington up to 10.1 per cent from 9.5 per cent the month before, and Christchurch in the South Island nudging up to 9.6 per cent from 9.4 per cent.

Growth in Auckland city, part of New Zealand's main population and business centre, eased to 7.2 per cent from 7.6 per cent.

The average national house sale price rose 1.3 per cent in September from the previous month to NZ$344,748 ($228,310), according to the QV data.

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 figures are not seasonally adjusted.

- REUTERS