KEY POINTS:
The housing market is showing its first signs of a slight cooling this year with prices and sales volumes dropping last month.
Rising interest rates and slower winter sales are being cited as major reasons for the marginal price drop and the bigger volume fall shown in Real
Estate Institute figures.
Institute president Murray Cleland said the figures showed house sales had eased back slightly from the "frantic pace" in the first five months of this year.
Two key indicators showed a turnaround. The record national median sale price of $350,000 fell $2500 to $347,500 last month and the number of sales fell from 9285 in May to 7474.
Mr Cleland questioned a Quotable Value report that concluded the market was still hot.
"The reports earlier this week of the market sustaining its run are based on sales effectively for May, which was a record month in anyone's terms and reported by us last month," he said. "Those figures are based on property settlements, whereas our figures are based on unconditional sales so, by definition, our figures are four to six weeks more recent and are right up to 5pm on the last business day of June."
QV said on Monday that prices sped up again last month, rising 12.2 per cent on an annual basis. QV calculated values over the June quarter and compared them to the same period last year.
But Mr Cleland said the winter was taking its toll. "So how much of the decline in June is due to seasonal factors and how much the Reserve Bank can take credit for with its OCR increases are key questions," he said.
Prices dropped in many regions but the length of time to sell a property remained static at an average 30 days.
But Mr Cleland said the latest figures might have been slightly skewed because the institute had changed the way it collected the data, tightening the deadline for sales reported by agents from June. This meant the cut-off period to report deals was slightly reduced, , which might have affected prices from some areas.
Tony Alexander, BNZ's chief economist, said interest rates would not fall but nor would they "go through the roof". He is advising borrowers to fix mortgages for two years at 8.9 per cent. He believes landlords are rejecting the market because of high interest rates.
"Investors are again stepping back from making purchases as they did in the first half of 2006. There are major concerns about cash flows as a result of the relatively sharp jump recently in fixed interest rates," Mr Alexander said. "These rate rises are highlighting the way in which rents have not kept up with house prices."
Shamubeel Eaqub, director investment research at Goldman Sachs JBWere, said the slight turnaround could be good news for people with mortgages. "Hopefully, the Reserve Bank won't punish households any more."