'Flood' of unsold homes as prices dip

Photo / Janna Dixon

The volume of houses sold nationally last month plunged 17 per cent and the market has slipped.

Shamubeel Eaqub, economist at NZIER, said the Real Estate Institute had yesterday posted housing figures on its website but issued no general statement with the numbers.

"Sales volumes plunged 17 per cent in January, once seasonal patterns are accounted for. It was -1 per cent from year earlier levels. The volume of sales is very similar to the lows we saw in 2008. This is deeply worrying," he said. "There is suddenly a flood of unsold homes. Total listings of homes for sale were up 12 per cent in January [seasonally adjusted realestate.co.nz data], combined with a plunge in sales, this means there is now 12 months' worth of homes for sale, up from nine months' in December. "

The national median which stood at $360,000 in December was $350,000 last month. It also takes 10 days longer to sell a house on average: 33 days during December but 43 last month.

Economists had expected a slowdown in volumes due to mortgage interest rate rises late last year, he said.

"The cheapest mortgage rate in January was 5.9 per cent compared to 5.5 per cent in September 2009. Renewed weakness in the housing market, combined with regulation uncertainty until the May 20 Budget means the outlook for the housing market is jaundiced in the first half of 2010," he said. "The housing market is a very good barometer of the economy. The latest data suggests the economic recovery is less than certain. With so much uncertainty on housing and the economy, the Reserve Bank is hardly pressed in raising interest rates."