Auckland property market dips in June

Real estate company Barfoot&Thompson says its June sales in Auckland show the residential market is marking time, while economists see the figures as weak.

The company said 665 sales last month were 16 percent lower than those for May, while the average price of $523,058 was down 3.6 percent.

The average price was similar to that for June last year, but sales numbers were down about 23 percent from 861 a year earlier.

Barfoot&Thompson chief executive Wendy Alexander said the figures were similar to the trend for June for the past five years.

The Government's budget, released in May, had contributed to lower sales but its impact on prices had not been great, and there was no indication investors were getting out of the market, she said.

"Factors that confirm this are the average price in June is the same as that for June last year, while the number of new listings, at 1194 for the month, is down 12.8 percent on those for May and the same as for June last year.

"If investors were getting out, listings would be up and prices would be under more pressure than they are. It adds up to a market that is uncertain, and many people are putting off making decisions."

The average house price had been in a band between $505,000 and $545,000 since the start of the year, and any significant changes in the steady-as-she-goes state of the market was unlikely before the return of warmer weather in September, she said.

ASB economist Jane Turner described the housing market activity in the report as "very weak", with the June sales numbers down a seasonally adjusted 15 percent.

The Barfoot&Thompson figures provided a preview to likely movements in Real Estate Institute of New Zealand nationwide figures due on July 14, she said.

"Housing market activity is likely to remain very weak throughout the remainder of 2010, reflecting waning demand."

Tax changes around depreciation rules had reduced the attractiveness of holding investment property at the margin.

Slowing net migration and rising interest rates would reduce support for housing demand over the year, and she expected house prices to fall slightly this year, Ms Turner said.

But the amount of downward pressure on house prices would be limited by a low level of supply.

Goldman Sachs JBWere economist Philip Borkin said the Barfoot&Thompson figures were the first full read on the Auckland housing market after the May budget.

While tax changes in the budget obviously made property a less attractive investment, he felt they were not as bad as some had earlier feared and had raised the possibility that some pent up demand in housing demand could be released.

But there was no sign of any release of pent up demand in the Barfoot&Thompson figures, rather it was the opposite, Mr Borkin said.

Given the time it took to buy and sell a property, it may be too early to confidently say the budget was having a sharply negative impact on the market.

"Nevertheless, while the July results be interesting, there is no getting around the fact that today's data is weak."