Property figures show battered market may be stabilising

Photo / Herald on Sunday

New Zealand's battered residential property market is showing fresh signs of stabilising, says the Real Estate Institute, which has released new figures showing median prices up in April and the average time taken to sell falling.

Institute president, Mike Elford said the figures "reinforce a certain level of stability in relation to price and turnover", and were pleasing particularly as April was traditionally a slower month due to school holidays and seasonal adjustments.

The total number of homes sold nationwide in April (6,210) was down on the March 2009 figure of 6,694 but still well up on the February total: 5,228. This compares with 4,450 in April last year - a pleasing trend, said Elford.

ASB Bank chief economist Nick Tuffley said low mortgage rates had "finally tempted more buyers back into the market."

The level of housing turnover had recovered to levels last seen in late 2007, just under the 15-year average house sales rate. Barfoot and Thompson figures for the Auckland region pointed to the likelihood of a strong nationwide pick-up.

House prices still remained lacklustre, said Tuffley, with the median house price of $340,000 still down 1.4 per cent on year-ago levels.

"We prefer the QV measure of house price inflation (which adjusts for the quality and composition of houses sold), the QV measures suggests that house prices are down around 9.2 per cent (for the three months to April compared to same period in the previous year). Nonetheless, house prices tend to lag house sales by around 3 to 6 months, and if the recent strength in house sales is maintained house prices are likely to be close to the bottom."

"While we expect that the housing market is now on a recovery path, it will be a mild recovery. The fundamentals for the housing market are not strong," said Tuffley. "Population growth is picking up, although remains relatively modest. House prices remain high compared to income levels and rents. In addition, with unemployment rising income prospects have deteriorated and households are becoming more circumspect on large purchase decisions and the amount of debt they wish to take on."

He said the housing market was "finally reacting" to the substantial interest rate cuts delivered by the Reserve Bank over the past nine months.

"With the housing market showing such strength in April, the Reserve Bank can take comfort that the rate cuts have been effective in stimulating this sector of the economy. What the RBNZ will now be looking for is signs of economic activity stabilising in other areas, business confidence in particular," said Tuffley.

The latest REINZ figures show strong turnover in Auckland where 2,081 properties changed hands in April compared with 1,350 in April 2008. Manawatu/Wanganui and Taranaki both saw a rise in the number of sales from March 2009 to April 2009: 283 to 322 and 166 to 188 respectively.

The median price for homes across New Zealand for April 2009 continues the "slow steady growth" recorded over the past few months. February's $330,000 median figure rose to $335,000 in March and again to $340,000 in April. This compares with the April figure from 2008 of $345,000, which is a percentage drop nationally of 1.44 per cent.

There were drops in median house prices in most regions, but the length of time it took to sell a house improved slightly from March, with a 44 day sale time dropping to 42 days.

This is two days quicker than in April last year.

House sales were to be strongest in the under $400,000 price bracket, accounting for nearly 4000 of the 6210 sales in April.

- CHRIS DANIELS