KEY POINTS:
Real estate agency Barfoot & Thompson, which says it sells one in three Auckland houses, has suffered its worst new-listing drop in a decade.
Director Peter Thompson said 975 properties were listed during January - the lowest number in 10 years, and well down on the 1558 properties
listed last January and the 1262 in the January before that.
The company had just 6758 properties for sale last month, the lowest number in a year.
Vendors fearing big losses on their house sales are thought to be responsible for the drought as they refuse to test the market.
"Many people have made the decision to hold properties rather than sell. People are saying, 'It's going to fall, why put it on when it's going to fall?"' Mr Thompson said.
Prices are also down on Barfoot's record set in 2007 when the agency recorded an average sale price of $550,000.
Last month, that dropped 9 per cent to $502,636 but Mr Thompson said this was still around the same level as in the final quarter of last year.
Barfoot's highest average monthly sale price last year was May's $534,254, he said.
Last year's average sale price was $513,597.
"Traditionally January is lower because more-affluent properties are generally taken off the market over Christmas but I would expect February and March to show a lot more activity in the $1 million-plus price range which will push the average sale price back up," he said.
Out of five residential properties offered at Barfoot's Chancery office auction yesterday, three sold under the hammer, he said, and negotiations were going on for the others.
Falling mortgage interest rates would bring more confidence to the housing market, Mr Thompson predicted.
BNZ chief economist Tony Alexander said sales had probably almost reached their weakest level. Activity was likely to fluctuate and begin a drift upward before the end of the year.
"House prices will possibly fall another 5 per cent, stabilising before year-end then rising slightly over 2010."
Real Estate Institute figures for January are due out next week but the organisation has already told members it is laying off staff and carrying a financial loss, which it is blaming partly on the sector downturn.
Industry sources estimated New Zealand had just 12,000 agents now, down from about 18,000 at the peak this decade.
But the downturn has at least provided one sector of the housing market with a silver lining. Barfoot said the average weekly Auckland rent was $384, around the same level as last July, but it is letting more places.
"The trend in rental activity endorses the view that owners are holding on to property," Mr Thompson said. "In January we let 791 houses and units, the highest number we have let in one month for the past seven years."