KEY POINTS:
The property boom is petering out with two sets of data showing falling prices and flagging buyer confidence.
Quotable Value figures out today show higher interest rates and cautious buyers are behind a slowing property market for the second consecutive month.
On Friday, the Real Estate Institute reported
a big fall in the annual rate of growth in prices and fewer house sales. It was down to 8.02 per cent for the year to October, compared with 12.3 per cent to September, said president Murray Cleland.
Most banking economists predict a soft landing for the sector and prices flattening, rather than plummeting.
BNZ chief economist Tony Alexander said a survey of 27 real estate professionals found overwhelmingly pessimistic sentiments.
When asked about the market outlook, only six respondents were positive. Nineteen were negative and two were neutral. One Auckland agency said sales volumes were the lowest for seven years.
Auckland-based property analyst Kieran Trass said yesterday that the property market had entered a slump phase.
"We have had the boom. It lasted a very long time and was a very good boom. But all good things must come to an end."
Mr Trass said momentum was building into the turning market and while there might be a bit of a comeback early next year, conditions would soften again next winter.
Growth in property values fell to 12.7 per cent in the year to October, according to Quotable Value. That is down from September's 13.3 per cent and August's 13.2 per cent.
All the main cities reported easing growth in property values, with the exception of Hamilton, where annual growth increased to 15.8 per cent from 14.4 per cent in September.
In Auckland City, growth dipped to 11.9 per cent in the year to October (12.1 per cent last month), Wellington growth dropped to 13.7 per cent (14.1 per cent), Christchurch dropped to 12.3 per cent (13.1 per cent) and Dunedin dropped to 9.4 per cent (10.4 per cent).
The national average for house sales increased slightly to $406,176.
Quotable Value spokesman Blue Hancock said higher interest rates and flagging buyer confidence were now reflected in a general slowdown in market activity and a shift from a sellers' market to a buyers' market.
"Purchasers are being careful and taking a longer time to buy property. Developers and investors are also acting cautiously and seem willing to wait for further market signs to appear."
Glenda Whitehead of Quotable Value said reports from Auckland indicated developers were stepping away from infill housing because of council costs and time delays.
The Real Estate Institute's sales figures for last month showed 6854 residential properties sold, only marginally up on September's 5894 sales but well under the 10,000 deals being recorded monthly at the height of the boom around 2003.
* NATIONAL HOUSING SNAPSHOT
AUCKLAND
Average sale price: $524,180.
Rise in past year: 12.8 per cent.
With the exception of Rodney, other areas showed a general easing. Properties taking longer to sell, even in hot spots close to the city, such as Sandringham, Kingsland and Western Springs. Reports of developers moving away from infill housing.
HAMILTON
Average sale price: $368,194.
Rise in past year: 15.8 per cent.
Despite sales being down, Hamilton was the only main city to record a higher year-on-year rate of growth this month. Prices for the year to October rose 15.8 per cent (14.4 per cent in September). There were large, one-off increases in the central city, north-west and south-west areas.
TAURANGA
Average sale price: $450,122.
Rise in past year: 7.7 per cent.
The market continues to be somewhat flat. Anecdotal evidence suggests selling timeframes are longer and bargain house hunters are making low offers. Widening gap between seller expectations and offers, agents said.
WELLINGTON
Average sale price: $438,263.
Rise in past year: 15.9 per cent.
The trend towards lower price increases is more evident. The city's western suburbs, Hutt Valley and Upper Hutt continue to perform well. Demand still strong for central locations.
Source: Quotable Value. Figures are for the year ended October.
