KEY POINTS:
Most house hunters believe this is the best time in years to buy, a bank survey reveals.
The ASB Bank housing confidence survey, conducted over May, June and July, found the number of people optimistic about buying a house was sharply up on the previous survey.
Their optimism was fuelled by mortgage rates being reduced in early May and June, and the Reserve Bank's announcement of a likely series of drops in its official cash rate.
ASB chief economist Nick Tuffley said declining interest rates would help bring stability back into the housing market, and lower interest rates and tax cuts offered a "glimmer of hope".
The survey shows 55 per cent of people think lower house prices are on the horizon, compared to 34 per cent in the previous quarter.
Mr Tuffley said the result was the most extreme reading since the survey began in 1996.
It reflected expectations that the housing market would remain weak for the rest of the year.
The number of houses sold had been affected by vendors' reluctance to drop their prices.
"The balance of power has shifted so those who really do need to sell will have to accept the lower prices buyers are willing to pay," he said.
House sellers have started slashing prices as sales fall.
Real Estate Institute figures show Auckland's median price dropped $451 a day or $14,000 in a month, from $435,000 in June to $421,000 in July.
The number of sales fell from 2446 in July last year to 1441 last month.
And it has emerged that more than 100 real estate offices around the country have closed their doors in the past year.
Realestate.co.nz chief executive Alistair Helm of Auckland blamed this on the downturn, which has almost halved sale volumes.
Last month, only 4489 houses sold throughout the country, compared with the high of July 2003, when 10,150 properties sold.
The 55 per cent slump has sliced agency revenues and resulted in many agents quitting the business.
Mr Helm said the closures should be seen as the right move.
"This is a sign that the industry is able to respond to market conditions. It's not a negative. It's a logical reaction to the situation.
"Everyone knows people are leaving the industry. The closures have been in the past 12 months, but significantly in the last six months."
Real estate offices had an average staff of four or five people, he said.
So the 100 closures might have resulted in 400 to 500 people leaving the industry. Some agents might have transferred to other branches.
All large agencies were affected, he said, citing Barfoot & Thompson, Bayleys, LJ Hooker, The Professionals and Ray White.
"It's not huge numbers of people. The numbers employed in real estate offices range from about two people up to 50."
A spokeswoman for LJ Hooker said six offices had shut in the past year, including in the well-heeled Auckland suburbs of Epsom and Mt Albert where houses often sell for more than $500,000.
"The Blenheim office closed because the owner retired, but offices have been shut at Mt Albert, Wellington Central, Blenheim, Nelson, Richmond and Epsom," she said.
"We have opened four new offices, in New Lynn, Wanganui, Havelock North and Twizel."
Harcourts refused to discuss closures, but last week it shut offices in Epsom and Parnell.
Rival agents said the "official line" from Harcourts was that these agencies had merged into the Remuera branch.
Ray White chief executive Carey Smith said in May he thought a quarter of the industry would vanish.
But although 13 offices in his chain had shut, another 13 had opened.
Barfoots' Dargaville office shut this year and First National has also shut some offices.
Trinity, a large former Century 21 office at Howick, shut a fortnight ago and its agents shifted to other Howick realtors. Six months ago, Remax shut a Botany office.
