KEY POINTS:
It's the media - not the economic cycle or high interest rates driving down house prices, say real estate agents.
Alistair Helm, the chief executive of realestate.co.nz, - the website owned by the major agents, says media stories have "an immediate and significant impact on buyer and seller
behaviour."
"We all know buying a home is the most expensive purchase most of will ever make and one fraught with uncertainty and complexity. So it's quite incredible decisions around it can be so dramatically influenced by media stories", said Helm.
His study monitored seven websites - described as "the major portals and real estate company websites" over a two year period from January 2006 until the end of last month.
Helm says he has found a correlation between a fall off in traffic to these websites with negative media stories.
"The most dramatic data showed the steep fall-off of traffic to these websites from the middle of February 2008 - significantly off the seasonal trend."
"This date in February correlates exactly with speculative media stories predicting 20 per cent- 30 per cent correction in property prices around the release of the real estate industry's January sales figures."
Helm says this "clearly shows the market was spooked by headlines" such as "Property Market Set to Crash Says Expert" and "House Sale Low is Sign the Tumble has started."
The past two weeks have been filled with negative news about the property market.
Sales at Auckland's biggest real estate agency group, Barfoot & Thompson, dropped 50 per cent last month from April last year to 453 - the slowest turnover since December 2000.
New research from PMI Mortgage Insurance showed house sales in the first quarter of 2008 were down more than 40 per cent per cent on the same period last year.
It showed a 53.3 per cent fall in sales from the same month last year and house price growth slumping to 2.1 per cent in comparison with 13.8 per cent a year earlier.
For the overheated Auckland market, price falls were predicted for the rest of this year, with stability expected to appear towards the end of 2009.
The Real Estate Institute's media study revealed a significant drop off in the number of new houses being listed for sale from early March.
The number of homes for sale being listed was close to 1,000 a week in January and February on www.realestate.co.nz but throughout March the total number of listings stayed static at around 109,000.
"The likely factor behind these figures is the combination of property being withdrawn from sale and owners reluctant to enter this very slow market," said Helm.
"Given the size of the industry and its importance to the NZ economy as well as each homeowner this study showing the extent of the media's influence is quite a wake-up call".
Helm has suggested a possible way for real estate agents to avoid the media when promoting the property market - go straight to the people.
"Perhaps it's time the industry began to provide its own media and look at directly connecting with customers by way of blog and email alerts and being more open with the major media by providing regular and expert insight into the state of the market"
- BY NZ HERALD STAFF
