New Zealand house prices show rise

Wellington: New Zealand house prices increased in October, adding to signs that record-low interest rates are helping the property market recover.

Prices rose 1.3% from September, the Auckland -based Real Estate Institute of New Zealand Inc said. Prices have surged 9.4% since hitting a three-year low in January.

New Zealand variable home-loan interest rates are at a 41-year low as Reserve Bank Governor Alan Bollard has kept the benchmark borrowing cost at a record-low 2.5% since April. Gains in the housing market may prompt the central bank to start raising interest rates as early as the first quarter next year, economists say.

“House price strength is far stronger than many would have expected,” said ASB Bank economist Jane Turner.