Residential property market turnover at record low

Turnover in the residential property market was at a record low in January, causing economists to question their view that the housing market is stabilising.

"The traditionally subdued month of January was marked by the lowest-ever level of new listings coming to market and turnover fell to a new low below that of January 2010,” said Helen O’Sullivan, the chief executive of the Real Estate Institute of New Zealand (Reinz).

The national median price of residential properties sold in January was down 2.9% on a year ago, but was still 4.6% above the 2009 figure.

From $352,000 in December 2010 the national median fell to $340,000 in January and was $10,000 below the January 2010 median of $350,000 but higher than the January 2009 median of $325,000.

The number of residential property sales declined to 3252 in January from 4397 in December 2010, and the previous low of 3666 sales recorded in January 2010.

The Reinz House Price Index, which adjusts for compositional changes in houses sold, fell 2.6% month-on-month. This is the biggest monthly fall in this index since at least 1992.

"We had thought the housing market was showing signs of stabilisation. We are now questioning that view," said Philip Borkin, an economist at Goldman Sachs.


"With house prices still clearly under downward pressure, this reinforces our belief that households will remain well and truly entrenched in deleveraging mode this year."

This would keep a lid on household consumption despite expectations for reasonable income growth.

ASB said the data was very weak even when the fact that it was a quiet time of the year was taken into account.

"We expect turnover to remain low over the coming months, and prices to remain soft, down around 5-6% on the 2007 peak," ASB said. The market remained tipped in favour of buyers, ASB said.

Yet Reinz is positive about the property market. Ms O’Sullivan said rental shortages in key urban areas such as Auckland and relatively low interest rates meant that home owners were holding onto property.

She said low levels of building consents suggested the stock of housing was not rising in the short-term.

"This in turn should provide support for prices over the coming 12 months, and perhaps an opportunity for would-be investors," she said.

Nationally, the total value of residential sales, including sections, declined to $1.3 billion in January from $1.9 billion in December.

A breakdown showed 73 properties sold for $1 million plus, 365 sold for between $600,000 and $999,999, 786 for between $400,000 and $599,999 and 2028 for under $400,000.