New Zealand House Prices Fall for Tenth Month in April

New Zealand House Prices (calculated based on quoted home values) fell for the tenth consecutive month in April, shrinking at an annual pace of -9.2%. The reading is within a hair of March’s record -9.3% decline, the largest in nearly 4 years. Deepening recession, rising unemployment, and scarce credit access have kept buyers away from big-ticket purchases, sending property values lower. For those that already own a home, the decline amounts to a negative wealth effect, eroding the value of one’s assets to discourage spending and thereby keep a tight lid on economic growth. The Reserve Bank of New Zealand has tried to encourage demand by cutting interest rates to a record-low 2.5% at the last policy meeting and explicitly stated that they “consider it appropriate to provide further policy stimulus to the economy [and] expect to keep [interest rates] at or below the current level through until the latter part of 2010.” The economy is expected to shrink -3.2% through 2009.