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Signs of recovery in New Zealand property market as rate of price decline slows

The latest figures from government agency QV Valuations clearly show that the rate of price declines is slowing and analysts claim that along with solid sales activity, low interest rates and a shortage of quality properties is a positive sign.

Residential values fell 5% in the 12 months ending in July, up from a 7.1% decline in the period through June, according to QV Valuations. And a survey from ASB Housing indicates that more people believe that it is a good time to buy.

'There are also signs that more vendors are putting their properties on the market. This is perhaps in response to the reports of shortages of listings, signs property values have stopped declining and increased buyer optimism,' said Glenda Whitehead of QV Valuations.

'Although activity has increased at the lower end of the market, values are increasing more in the middle value range of the market,' she added.

But the market is still fragile, she pointed out and no one is expecting another property boom. Fear of unemployment is one of the main factors putting people off buying.

Reserve Bank Governor Alan Bollard is unlikely, however to cut interest rates further because of concerns about fuelling a housing bubble. The effect of lower mortgage rates have yet to filter through into the market, experts point out.

Indeed, home-building approvals fell for the first time in three months in June, signalling that demand it still regarded as poor. But economists expect building approvals to keep pacing gains in house sales and prices and eventually lead the economy out of recession.