28 Jan 2011

Bollard expects house prices for fall further

6:12 pm on 28 January 2011

New Zealand's Reserve Bank Govenor says he expects house prices to fall further in 2011.

The prediction was in notes released ahead of Alan Bollard's speech to a business audience in Christchurch on Friday.

In notes released to the media, Dr Bollard said he expected a further weakening in house prices in 2011, based on recent house sales.

In the delivered speech, Dr Bollard said the housing market had bottomed out, but did not explicitly mention prices.

A spokesperson for the governor later confirmed the central bank's view is that prices will fall further this year - but any falls will not be dramatic.

The spokesperson confirmed that the central bank has a downside scenario, where prices could fall even further, if households continued to aggressively boost savings levels.

He says if that happened, the Reserve Bank might have to look at again cutting the offiicial cash rate.