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House prices are sliding around the country. And sales, especially in Auckland are slow, JULIA OAKLEY reports
Figures just released by the Real Estate Institute of New Zealand indicate the residential market experienced a downturn in the last quarter of 1999.
Real Estate Institute president Max Oliver said although prices remained "relatively steady," the market nosedived last year after Reserve Bank governor Don Brash issued an early warning in August heralding an increase in interest rates in November.
Investors reacted nervously to this news, holding off buying in anticipation of a hefty hike in interest rates.
The national median sale price for December was $170,000, compared with $172,000 in November and $168,000 for October.
Auckland's 1999 median sales prices were $232,000 for October, $238,050 for November and $235,000 for December.
"I think it would be fair to say that the market was affected tremendously by the thought of interest rates going up - it was the uncertainty about interest rates rather than the actual effect of them that put a dampener on a lot of people," said Oliver.
National sales volume increased by 12.5 per cent over the whole of last year, with Auckland experiencing a 13.5 increase.
However, last quarter figures nationally were 12.9 per cent down on the last three months of 1998, with Auckland down 19.1 per cent.
Oliver anticipated that the rise in the Official Cash Rate to 5.25 would lead to an increase in interest rates by the end of the month.
"Unfortunately, just at a time when we need a little bit of a kick along in sales activity, this is going to put an even greater dampener on any recovery that home owners were looking for."
Oliver also expressed concern that if the rate continued to rise, mortgage rate increases could be expected to continue "for some time yet."
According to REINZ, a third of institutions increased their floating rates, which now range between 6.5 per cent and 7.25 per cent, compared with the 5.85 per cent available in the month to December 10.
Oliver said most institutions recorded an increase in one-year fixed interest rates of between 0.25 and 0.30 per cent on last month's rates, ranging between 6.85 per cent - the lowest being Southland Building Society, Sovereign Home Mortgages and Housing Corp - and 8 per cent. He said fixed two, three and four-year mortgage rates now ranged between 7.75 and 8.95 per cent, while five-year fixed rates were now between 8.7 and 9.1 per cent.
Outside Auckland, the price of residential property continued to climb - "although quite slowly ... probably in line with inflation," said Oliver.
"But what we did see, probably in October and November, was lower sales than we had even in the equivalent months of 1998, whereas in the previous six months from January to June we had seen a 30 per cent increase on 1998's figures, so that was quite a dramatic switch."
The median price across the North Island rose on a month to month basis, with the exception of the greater Auckland area, while it fell in the South Island, with the exception of Otago's median price of $145,000, consistent with November. Nationwide, section sales activity fell, while the national median price rose, with 402 sections sold during December at a median price of $80,000 compared with 625 at $78,000 in November.
In Northland, 134 homes changed hands in December, down from 200 in November, with a median price of $144,000 - up from $142,000 in October and $137,000 in December 1998 when 173 homes were sold.
The Auckland region recorded a total of 1452 home sales in December, down from 2234 in November and 2150 in December 1998.
On the North Shore, home sales fell from 398 in November to 276 in December. Year-on-year the median price also fell - from $256,750 in December 1998 to $253,750.
In Waitakere, 217 homes were sold, down from 295 in November and 314 the previous December, for a median price of $205,000.
In Auckland City, 417 homes changed hands, a marked decrease on the 780 sold in November and 809 in December 1998. However, the median price rose from $269,500 in November and $260,000 a year earlier, to $280,000.
Manukau City experienced a substantial drop in sales (331 in December down from 453 in November and 426 a year ago) and a slight decrease in median price ($228,000 compared with $230,000 in November).
In the Waikato, Bay of Plenty and Gisborne 748 homes were sold compared with 991 in November. The median price dipped from $165,000 in November to $162,000, an increase on December 1998 ($155,000).
In the Hawkes Bay the median price rose slightly from $127,000 in November to $129,000 (compared with $124,000 in December 1998), but sales volume slipped from 261 in November to 209.
For the Manawatu and Wanganui, sales fell - 244 in December compared with 356 in November and 333 in December 1998 - however the median price ($107,250) was up slightly.
In Taranaki sales volumes fell slightly (133 down from 138 in November and 142 in december 1998) while the median price rose to $108,000 against $96,500 in December 1998 and $102,250 in November.
Looking ahead, Oliver said we were heading into a low-inflation period, the likes of which had not been seen since 1968-69.
"The ramifications of that would be good if interest rates were down to 5.5 or 6.5 per cent. The difficulty is that if interest rates get up to 9 per cent and inflation still stays at 2 or 3, you're going to see people walk away from owning a home and more people renting instead.
"At the moment we've come back from about 72 per cent home ownership in the 1970s to 68 per cent now, and if we continue along the same track we'll have even less people owning their own homes, which I believe will see an increase in crime."
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