KEY POINTS:
Sales figures released today by Auckland's biggest real estate company show that property prices did indeed fall last year - but not as much as many observers predicted.
Barfoot & Thompson's average sale price for the 12 months to December 2008 was $513,597, compared to $538,478 for 2007.
That represents a drop of 4.7 per cent.
Managing Director Peter Thompson said the market ended the year on a high note with more sales clocked up in the company's final week of trading for 2008 than for any other week during the year.
Barfoot & Thompson closed off the month on Friday 19 December and 227 sales were recorded for that week, compared to an average of 171 per week throughout the year. The average sale price for the month of December was $509,513, up 1.7 per cent from November.
Thompson credits the Reserve Bank's action in cutting interest rates as the reason for the upswing. "We've certainly seen an improvement in the market since the Reserve Bank's most recent move. It seems to have tipped the balance in terms of converting interested parties into committed buyers."
Thompson said the 4.7 annual decline is "a really good result, given all the dire predictions that have been tossed around. This should also help lend confidence to the market and reassure both vendors and prospective buyers."
Shamubeel Eaqub, economist at Goldman Sachs JBWere, has offered a less enthusiastic view of the Barfoot & Thompson data, which he said showed sales volumes were historically very low but appeared to be stabilising in recent months.
"Average price in the month was down 9 per cent year-on-year, indicating further steepening in price declines," said Eaqub.
"Incomplete data released for the month of December means analysis is obscured, but volumes remain very low in absolute terms and price declines appear to be steepening," he said. "Recent sharp interest rates cuts should help, but negative net migration and still poor affordability are headwinds."
The small absolute level of sales meant there was now significant volatility in monthly changes.
Eaqub said that because of the way the average price was composed, it was not a "reliable indicator of price movements".
Declines in this price measure were steepening, said Eaqub, down 9 per cent in the month, after an 8.3 per cent fall in November 2008 and an increase of 6.9 per cent in December 2007.
"The outlook for housing remains challenging. While falling prices and mortgage rates should be positive, still over-valued pricing, tighter lending criteria and net emigration means there are imposing negatives as well. Falling home prices, construction activity, employment in the sector and wealth effects are still working through the economy. These are set to intensify and surface over the next 6-9 months."
Eaqub said he expected the Reserve Bank to cut the Official Cash Rate later this month by 75 basis points - 0.75 per cent.
- NZHERALD STAFF