The latest mortgage application figures from Veda Advantage, New Zealand’s largest credit information provider, offer some promising signs for the sluggish housing market.

The number of mortgage enquiries climbed 5% in May compared with April, and were up 7% on March.

Veda Advantage NZ Director John Roberts commented:

“The increase in mortgage applications hints at some stabilisation in the housing market, though it is obviously far too early to talk about a revitalisation.

“If you look at the way the market has trended since 2000, a significant recovery in the next 12-18 months would be a real anomaly, particularly in light of wider economic factors. But there are at least some indications that activity in the property market is not stagnating, despite the likelihood of a further slump in house prices.

“Veda Advantage further believes that this slight reversal in the downward trend has been a result of the large trading banks reducing their two year fixed term interest rates, albeit the Reserve Bank has yet to move the official cash rate.”

The figures come in the wake of a report issued by the Reserve Bank forecasting a three-year decline in house prices before they return to current values and may provide some cheer for New Zealand’s house builders who are finding less work.

Statistics New Zealand released figures yesterday showing that the value of residential building work put in place fell almost 7% percent in the March 2008 quarter (after removal of price changes and seasonal fluctuation). This follows a fall of 2.0 percent in the December 2007 quarter.

Non-residential building work fell 5.9 percent in the March 2008 quarter, following a rise of 12 percent in the December 2007 quarter. These changes are largely due to work on commercial buildings.

The value of all building work put in place fell 6.3 percent in the March 2008 quarter.