NZ’s rising unemployment will sap housing demand, ANZ says

“As far as the property market goes, all eyes will be on the job market, with anecdotes and evidence pointing to a rapid rise in the unemployment rate,” economists at the bank said in their monthly report.
    

The bank’s property gauges for January indicate a base may be forming in the property market, with housing, while still ‘expensive,’ now the most affordable in two years. The median house price fell 4.8% to NZ$337,500 in December from a year earlier and prices will probably fall further in 2009, according to the report.
    

“The Reserve Bank is providing support by cutting interest rates aggressively,” ANZ economists said. “But such action needs to be read in conjunction with the economic climate and a world-wide recession.”
    

Fixed-term mortgages have now ‘caught up’ to variable rates, with terms of 6 months to 5 years now close to 7%. As the central bank cuts the official cash rate further, short-term rates are likely to fall further than longer term rates, creating a positive yield curve for the first time in almost a decade, ANZ Bank said.