SYDNEY, May 14 (Reuters) - New Zealand home prices slipped in April as high living costs dampened buyer sentiment, though most regions were steady and overall market conditions were largely unchanged, the Real Estate Institute of New Zealand (REINZ) said on Thursday.
Seasonally adjusted median house prices fell 0.5% from March, and were 0.6% lower than a year earlier, REINZ data showed. National home sales declined 2.1% from March and were down 7% on the year.
"April marks the first clear sign that
the combined weight of cost-of-living pressures - higher fuel costs, food prices, insurance and (property tax) - began influencing buyer decisions in a meaningful way," the report said.
"Buyers remain active but measured, responding to cost-of-living pressure rather than stepping away from the market," it added.
REINZ said the housing market may shift from the hopes of cuts in the official cash rate, that underpinned the recovery last year, to the possibility of a hike this year as annual inflation stays above the central bank's target range.
New Zealand's inflation rate was 3.1% in the first quarter, slightly above the central bank's annual inflation target of between 1% and 3% over the medium term.
Having held the cash rate at 2.25% since December, the Reserve Bank of New Zealand (RBNZ) in April signalled it will act decisively if inflation heats up. It also warned that the Middle East conflict could stoke inflation and sap growth.
Markets are wagering on a 50% probability of a quarter-point hike in the cash rate when the RBNZ meets at the end of this month, and three such moves by the end of this year.
(Reporting by Renju Jose in Sydney; Editing by Jacqueline Wong)
