House prices down 8.3%, affordability up

The decline in January follows a 7.4% drop in December, according to the QV Valuations report. The figure is calculated over the three months ending in January from the same year-earlier period.    

“Declining interest rates would normally stimulate buyer activity, but concerns over job security and a more cautious approach to lending by financial institutions seems to be preventing this,” said Blue Hancock, a QV Valuations spokesman.   

“Home affordability has definitely improved and there are good opportunities in the current market for those who can afford it, with motivated vendors and decreasing interest rates,” he said. 

Reserve Bank Governor Alan Bollard last month said there is room for further cuts to the official cash rate this year as the global economy falters. Figures last week showed the jobless rate climbed to 4.6% in the fourth quarter, and some economists predict the rate will top 7% this year.