Brakes go on - big dive in house sales

By Anne Gibson

New Zealand's biggest housing market is in the grip of a slowdown.

Figures from Auckland's largest real estate agency show a big turnaround in sales.

Barfoot & Thompson said the average house sale price fell more than $14,000 last month, the number of unsold homes was rising, people were slower to buy and the number of sales was declining.

Another agency, Harcourts, said prices in its northern region - which included Auckland - had fallen.

Sales in the northern area were down 25 per cent in the 12 months, it reported.

BNZ chief economist Tony Alexander said the market had slowed considerably, and the latest figures were unequivocally weak.

"Properties aren't selling and prices are not rising, so the housing market is going through a period of adjustment," he said.

The slowdown was orderly but the weaker market could last for quite some time.

"It looks like the housing market is going to be relatively flat for perhaps a couple of years and then if there is an upturn further down the track it is unlikely to be a particularly large one," he said.

Goldman Sachs JBWere economist Shamubeel Eaqub said the housing slowdown was becoming more evident.

The market had been hit by high interest rates and falling migration.

"The Reserve Bank will be relieved to see the housing market finally slowing because it has been a significant source of inflation, directly through higher construction costs and indirectly in terms of the wealth impact on consumption."

An orderly correction would be best for the country, but the accumulation of over-valuation in house prices meant this could not be taken for granted.

Barfoot's figures were an important bellwether, because they covered 34 per cent of Auckland sales and 12 per cent of New Zealand sales.

Auckland University property department head Professor Larry Murphy said the Barfoot figures were only one sample, but showed all the signs of a gradual slowdown.

The market could pick up again in the traditionally busy lead-up to Christmas and early next year, he said.

Barfoot and Thompson agents reported selling houses for an average of $552,480 in August and $538,247 last month, a trend the agency said was clear evidence of the property market slowing.

Average sale prices set a record in March when they reached $564,162.

Harcourts chief Bryan Thomson said his agency's northern area average sale price fell slightly last month but this was probably influenced by a high number of low-priced houses and sections selling.

He had a different view of the market: "It's a good solid market, not falling in our opinion at all. In the last four months, price rises have stabilised."

But Barfoot's director Peter Thompson said last month was the quietest September since 2000.

High interest rates, school holidays - which started late last month - and people travelling to the Rugby World Cup were all to blame.

"At the upper end of the market, many potential vendors are overseas following the World Cup action and have avoided placing their properties on the market while they are away," he said.

Homes were taking much longer to sell, and vendors should be more realistic about prices they could expect, he warned.

Auckland houses now take 33 to 37 days to sell, up on 31 to 35 days two months ago.

Last month's Real Estate Institute figures showed house sales at a seven-year low.

The figures slumped to the lowest July and August levels since 2001, when the real estate boom started. About 10,000 houses were sold every month during this boom; 6660 and 6394 were sold in July and August.

But prices still rose marginally.

New Zealand's 20,000 real estate agents reported a national median of $345,000 in July which crept back up in September to $350,000, the same as May's record high.

Institute figures for last month are due out within the next fortnight.

Barfoot's property management division reported a quiet September, with just under 600 new tenancies.

Average Auckland weekly rents rose from $368 in August to $371 last month. The rent average record this year was $375 in May.

Barfoots said rents had risen from an average $266 a week in 1998 to $347 last year.

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