House sales at 5-year low

House sales have fallen to their lowest ebb in five years, leaving an industry chief calling the market "sluggish" and economists saying the Reserve Bank would be pleased.

Although the national median sales price last month recovered to the $300,000 it hit during November, Real Estate Institute figures out yesterday showed the most disappointing January since 2001.

"The market is definitely a lot more sluggish than at the end of last year," said institute president Howard Morley, blaming high interest rates and long holidays. People should look more to data for February and March to get a truer picture of where the market would head this year, he said.

On the national scene, prices fell in six regions and rose in five.

Other data released in the last week also indicated an inert market. January was slow for both the country's largest agency, Harcourts, and Auckland's biggest, Barfoot & Thompson.

Harcourts' sales volumes last month were down 30 to 40 per cent and its chief, Bryan Thomson, blamed high interest rates, two long holiday weekends for Aucklanders, long school holidays and weeks of hot weather as factors which drove buyers away.

Last month was Barfoot's slowest January since 2001. Sales volumes were down around 20 per cent.

Quotable Value statistics released on Monday showed housing prices rose by 16.8 per cent in the 12 months to January. In the 12 months to December, the rise was 15.8 per cent.

However, QV spokesman Blue Hancock said anecdotal feedback and market activity suggested the market was beginning to level out.

BNZ chief economist Tony Alexander said the latest figures suggested prices were flattening out. Sales were down 10 per cent since January last year, which was nothing amazing, but an ongoing indication that the market was slowly declining, he said.

"Some of the heat is coming out of the market but things are still reasonably active. The market is easing off at a calm rate and I think the Reserve Bank will be pleased it's doing that, although I strongly believe the bank would like to see a more rapid easing," Mr Alexander said.

Darren Gibbs, chief economist at Deutsche Bank, said the Reserve Bank would want to see the slow decline in the housing market continue during the next six months.

It is now taking on average 38 days to sell a house, compared to 27 days in the December sales data, but this is typical of sales activity during the holiday period, Mr Gibbs said.