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Housing Market Will Remain Strong Despite Interest

Media release, for immediate release, 29 April 2004

HOUSING MARKET WILL REMAIN STRONG DESPITE RATE RISE

Today's rise in the Official Cash Rate is not expected to have any identifiable effects on the local housing market, according to a leading Canterbury real estate firm.

Director of Simes Ltd, Peter Cook, says the 0.25% increase to 5.5% was not unexpected.

"The rise is no more than a fine-tuning measure to balance economic factors. As we predicted, the January rate rise had no measurable impact on the housing market. This rate rise will be no different," says Peter Cook.

In announcing the rate rise, Reserve Bank Governor Alan Bollard said despite data that suggested a cooling in activity in the housing market, pricing pressures remain strong.

"This disproves those pessimists that were talking down the market earlier this year. The housing market is still experiencing very strong demand and achieving high sales volumes and prices, as people recognise residential housing as still being fundamental to their wellbeing. With increased business prosperity, lower immigration and enhanced opportunities for exporters due to the decreasing exchange rate, job security should remain high. This provides continued certainty for purchasers and their ability to service debt, and that will keep the housing market buoyant."

Last month the median property price in Christchurch City was $227,000, up from $220,000 in February and $175,000 in March 2003. There was also a 17% increase in the number of houses sold when compared with the previous month.

ENDS

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