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A "staring competition" between buyers and sellers is stalling house sales, says the head of one of New Zealand's biggest real estate chains.

Real Estate Institute figures out yesterday showed fewer than half the number of houses sold last month than in May last year.

It is the third month in a row sales have been down 45 per cent or more on the same month last year.

Harcourts New Zealand chief executive Bryan Thomson said that number was too low for New Zealand's population, and was despite record numbers of people with pre-approved finance waiting to buy.

"It's almost a staring competition," he said. "Buyers are saying, 'We're going to wait because we've heard prices are coming down. Sellers are saying 'We don't agree, and if we don't get a good price we will take our house off the market or not put it on at all'."

The figures show houses are taking longer to sell - an average of 49 days compared with 30 days a year ago.

But there was no sign yet of the 7.7 per cent drop in house prices the Reserve Bank has forecast by the end of the year, with the median sale price holding firm at $345,000 - the same as last month and $5000 less than in May last year.

Real Estate Institute president Murray Cleland said the predicted price drop hadn't happened, despite the drop in sales. "It's a negotiating market."

But Frank Excell, whose company Excell Realty sells houses in the suburbs of Sandringham and Mt Eden, said he had no doubt prices had adjusted downwards more than the national median house price revealed.

Very low sales volumes and some sales of a few big properties had skewed the figures in his area, he said.

"People with a reason to sell are definitely selling below expectations."

Mr Excell said a four-bedroom Mt Eden home on a 600sq m section had just received an offer in the low $700,000s - a price adjustment of $60,000 or $70,000 from what he would have expected to get in January. Other offers on the house had been around the same range. "If someone wants or needs to move on, they are taking a knock in price," he said.

Barfoot and Thompson agent Merv Lowe said a drop-off in the sales of lower-priced homes was keeping the national average artificially high. "The $4-600,000 bracket has definitely slowed. I've talked to colleagues in South Auckland, where there are a lot of first home buyers, who say selling is definitely down."

Mr Lowe said many first home buyers were more vulnerable to high interest rates than second or third property buyers, meaning fewer sales in the lower price ranges. Property speculation had also fallen.

But Mr Lowe said prices for good quality properties on full sites were holding up "reasonably well".

"Properties that were waltzing out the door, fuelled by demand, are now sticking. Whereas people were thinking, 'If I don't buy now it's all over,' there's a feeling now that there is no urgency. People will wait until the right property comes along."

Mr Excell said prices would stabilise as the "must sells" flowed through the system and those who did not have to sell held on for the price they wanted.