Auckland house sales 'weakest'

Auckland's housing market has become the weakest in New Zealand, a new measuring system claims.

It shows the city has one of the slowest rates of price growth, the time it takes to sell a property is lengthening and the number of sales is falling.

The "property cycle indicator" was developed by mortgage broker Mike Pero and economic consultant and forecaster Infometrics.

It shows the expensive Auckland and Central Otago/Lakes district are the two weakest housing markets.

But its accuracy has been challenged by a university professor and two bank economists.

Mike Pero chief executive Jeff Staniland said so much data was available on the housing market it was hard for the average person to see what was going on.

So the two businesses invented the indicator to explain housing cycles in cities and areas.

It analyses changes in house sales, price movements and the time taken for properties to sell.

It assigns a negative figure of up to -10 to an area where the market is in a slump and a positive figure of up to +10 to a booming area.

Lower sales volumes were usually the first indicators that a market rise was coming to an end. Then properties took longer to sell and the last variable to chance was prices.

Victoria University associate professor of economics and finance John McDermott questioned the way the indicator's figures were produced.

"I have no idea how reliable this is," he said. "I would need to see how the index was constructed to be able to determine its usefulness. Perhaps after it has been in the market a while, we will be able to tell if it is working as advertised."

ASB Bank chief economist Anthony Byett said the indicator was useful as a broad overview, but he also questioned its methodology.

ANZ chief economist Cameron Bagrie said the indicator was "a useful addition to the property investor's armoury".

But he disagreed with the two firms taking 1999 as starting point, as that was the start of a boom period.

The 1999 starting point was leading the indicator to be too pessimistic. "The strong down-turn phase is still to come in my eyes," he said. "Certainly, the Reserve Bank doesn't think the housing market is in a strong downturn stage yet. It's coming though."

Real estate agency Barfoot and Thompson's July sales figures show the average Auckland price for a house was $487,229, second only to the $492,882 record set in December.

But the number of sales was falling - from 1000 in May to 926 in June and 877 last month.


What's indicated

Northland -7.4
Auckland -9.3
Waikato/Bay of Plenty/Gisborne -7.8
Taranaki -6.8
Hawkes Bay -8.2
Wellington +0.9
Nelson/Marlborough -4.5
Canterbury/Westland -6.6
Central Otago/Lakes -9.3
Otago -8.3
-10 for the weakest market, +10 for the strongest market