House prices and sale numbers up

Relatively low mortgage interest rates could be firing up Auckland's housing market and encouraging more people to buy.

Shamubeel Eaqub of the NZ Institute for Economic Research said cheaper funding costs could be a factor behind the Auckland market appearing to recover.

Barfoot & Thompson said yesterday their data illustrated an Auckland house sales recovery last month.

"House sales are consistent with stabilisation returning in the economy. The level is still not as strong as before the slump, but it looks as though the significant reduction in interest rates is gaining traction," Mr Eaqub said.

Mortgage interest rates are now around 5 to 6 per cent but Westpac economists yesterday warned against believing in a housing recovery, saying early signs were more of a flash in the pan than real evidence of a change.

Barfoot & Thompson's volumes are ahead of last May when 515 sales were made compared to last month's 814 sales. Director Peter Thompson said his firm, which sells one in every three Auckland houses, had just had its best month in two years. He said the housing market was now active, confident and stable.

Last May, the average B&T sale price was $534,000, well up from April 2008's $520,380, Mr Thompson said. Prices in May averaged $533,909 which Mr Thompson said was the best monthly average in the last 12 months.

But Mr Eaqub said price data "seems to have been affected by an unusually large proportion of higher-priced homes being sold. It raises the question if it is the least fortunate who are most affected by the recession."

The latest ASB Housing Report showed 45 per cent of respondents expected house prices to fall in the coming year, only slightly below the 51 per cent who said that in the December quarter they were expecting declines.

BNZ chief economist Tony Alexander said people have a strongly dour view on house prices. He is expecting new house-building numbers to slowly recover from the middle of this year and house sales activity to fluctuate but begin a drift upward before the end of this year.

Barfoot rental figures showed average Auckland weekly rents at $379, a $20 drop in the month and the lowest average weekly rent for 19 months. Mr Thompson said landlords were having to cut prices to find tenants.

BARFOOT & THOMPSON AUCKLAND HOUSES

2008

January

AVERAGE PRICE: $517,613
TOTAL SALES: 604

February

AVERAGE PRICE: $495,272
TOTAL SALES: 600

March

AVERAGE PRICE: $522,336
TOTAL SALES: 632

April

AVERAGE PRICE: $520,380
TOTAL SALES: 453

May

AVERAGE PRICE: $534,254
TOTAL SALES: 515

2009

January

AVERAGE PRICE: $502,636
TOTAL SALES: 515

February

AVERAGE PRICE: $512,536
TOTAL SALES: 559

March

AVERAGE PRICE: $491,780
TOTAL SALES: 924

April

AVERAGE PRICE: $402,726
TOTAL SALES: 809

May

AVERAGE PRICE: $533,909
TOTAL SALES: 814