House sales fall as market softens

File photo / Herald on Sunday

The number of houses sold in New Zealand fell in December from a year earlier, continuing a trend of a softening market, though the national median sale price rose to a new record, according to Real Estate Institute figures.

"There is no doubt about. New Zealand's housing market is slowing," said Westpac chief economist Dominick Stephens.

The number of houses sold fell 1.1 percent to 5,688 in December from the same month a year earlier, and were down 18 percent from November, a bigger drop than the average decline, REINZ said in a statement. The fall in sales volumes was led by Manawatu/Wanganui, where turnover dropped 37 percent, followed by a 27 percent slide in Southland and a 24 percent decline in Wellington.

"Lower turnover is one classic indicator of a market slowdown. The other is that it takes longer to sell houses," Stephens said.

The average number of days to sell a property slowed to 32 days from 31 days in November, and was unchanged from a year earlier.

The median sale price rose 0.5 percent to $427,000 in December, and was up an annual 9.8 percent. Prices in Auckland, which have been driving growth over the past year, fell 3.2 percent to $620,000, and were up 12 percent on the year.

"The softer trend in sales noted in November 2013 continued into December," chief executive Helen O'Sullivan said. "Further data is needed over the next few months to determine if this is a new (price) trend, or a short-term effect caused by a change in the pace of sales at lower price points given the increased complexity some buyers in these price points now have to navigate."

In October, the Reserve Bank imposed restrictions on lending with small deposits as bubbling housing markets in Auckland and Christchurch, which typically account for half the nation's property turnover, raised fears about the nation's financial stability if there was a sharp correction.

Despite the fall in sales volumes, the tight inventory of existing dwellings and the low (but climbing) supply of new dwellings are supporting overall prices, ANZ senior economist Mark Smith said.

"Climbing housing construction and pending increases to mortgage interest rates will eventually help reduce pressure on prices, but the RBNZ are likely to remain vigilant given the financial stability and inflation risks posed by the buoyant Auckland property market," Smith said.

The stratified housing index, which looks to smooth out peaks and troughs, fell 1 percent in December, and was up 9.2 percent in the year.