Fall in house turnover and prices

House prices and turnover took a plunge last month - particularly in Auckland - prompting economists to speculate that the Reserve Bank would be delighted.

Real Estate Institute figures out yesterday showed the national median price fell from a record $300,000 in November to $295,000 last month. The number of sales in the Auckland region dropped a third from 3107 in November to 2123 last month.

Institute president Howard Morley dismissed the price tumble, saying it always happened around the holidays because of the festive season and a shorter selling month.

But he found it harder to explain a 26 per cent drop in the number of properties changing hands, from 9357 in November to 6906 - with last month's figure 19 per cent lower than in December 2004.

Mr Morley said properties hardest hit by the fall were those selling for under $400,000.

All Auckland areas had fewer sales, down from 568 to 374 on the North Shore, 415 to 281 in Waitakere, 791 to 701 in Auckland city, 666 to 428 in Manukau and 123 to 87 in Papakura.

Real estate firm Barfoot & Thompson's figures showed it finished last year with a record average house sales price of $492,882.

The previous high in October was $474,271.

Mr Morley said it was important to remember that the housing market had put in a very solid performance last year when prices rose 13.4 per cent nationally, despite predictions of a fall.

Deutsche Bank chief economist Darren Gibbs said Reserve Bank Governor Dr Allan Bollard would be pleased.

"Putting ourselves in the Reserve Bank's shoes, the December housing market report provided some modestly good news."

But it would be less delighted by the short time it takes to sell a house.

Vendors take on average 29 days, compared to a historic average of 40 days and the central bank would like to see that marker pushed out substantially, he said.

"The Reserve Bank will be looking for the median days to sell indicator to move higher over the early months of this year, indicating greater balance in the housing market," he said.

House price inflation was running at around 15 per cent annually and although the national median had dropped, it was still 15.2 per cent higher than a year earlier, Mr Gibbs said.

Homeowners saddled with large mortgages might be able to breathe a sigh of relief next week.

Anthony Byett, ASB Bank's chief economist, said the Reserve Bank was expected to hold the official cash rate at the same level of 7.25 per cent at its review next Thursday.