The traditional spring rise in property sales has failed to materialise, with sales dropping to a record low for the month of October according to data released today by the Real Estate Institute.Across the country residential property sales fell to only
The traditional spring rise in property sales has failed to materialise, with sales dropping to a record low for the month of October according to data released today by the Real Estate Institute.
Across the country residential property sales fell to only 3903 in October, the lowest total for the month since the institute records began in 1992.
It was down from 4323 sold in September and 4287 in August and was the first time sales had dropped below 4000 in October for more than a decade.
However, it was above the record low of 3666 sales set in January this year.
Although the median price for October held firm at $350,000, the same as in September, the institute’s stratified Monthly Housing Price Index decreased by 0.9%.
The index shows house prices are now 6.5% below their peak in November 2007.
“The usual spring influx of listings has been late this year but activity is picking up now and the November figures should be better,” said the institute spokesman Peter Thompson.
”People planning to change houses appear to have held back on listing their current homes until they see what else is available and how the market is moving.”
“Though volumes are down overall prices are remaining stable,” Mr Thompson said.
The national median price stayed steady at $350,000, the same as September and August but is 1.4% down on the October 2009 median of $355,000.”
The national median number of days to sell shortened to 41 in October from 43 in September and August but it is still 10 days longer than the 31 days recorded in October 2009.
Nationally the total value of residential sales in October, including sections, decreased to $1.67 billion.
The breakdown of the values of the properties sold is 119 for $1 million plus, 451 between $600,000 and $999,999, 990 between $400,000 and $599,999 and 2,343 for under $400,000.
From district to district, changes in the median prices over the past year varied from increases of up to 5.7% in seven regions to falls of up to 6% in four regions, with a drop of 20% in Central Otago Lakes.
The property market is unlikely to improve any time soon, according to analyst Helen Kevans of JP Morgan, who has tipped house prices to keep declining for some time yet.
She said demand for property has weakened significantly amid higher interest rates (the Reserve Bank hiked the official cash rate 25bp in June and July) and changes to the way property is taxed.
“With borrowing for housing rising at its slowest pace in more than a decade, we suspect that house prices in New Zealand will continue to head lower, particularly given that New Zealanders have adopted a more cautious approach to spending,” she said.
“Indeed, with households realigning their spending patterns and consolidating their balance sheets, which have historically been too leveraged to housing debt, property investors will be reluctant to re-enter the market.
“Already, it is taking on average 41 days to sell a property in New Zealand, and in coming months it likely will take much longer.
“Further, given the backlog of unsold property sitting on the market, we expect that house prices will continue to trek lower throughout the remainder of the year.”
