House sales stay in the dumps during August

Photo / Greg Bowker

Latest house sales numbers released this morning show sales kept falling in August, with the monthly housing price index rising 0.3 per cent.

In the three months to August prices measured by the Real Estate Institute of NZ (REINZ) have fallen by 1.2 per cent, while they nudged upwards 0.9 per cent compared to August last year.

Housing prices are 5.3 per cent below their peak, which came in November 2007.

In Christchurch, housing prices in August were 5.3 per cent above those in August last year, with housing prices in Auckland (up 0.7 per cent), Wellington (up 0.8 per cent) and other South Island suburbs (up 1.6 per cent) also up on the same period.

Prices for other North Island suburbs fell 1.7 per cent from the levels seen last year.

The number of sales across New Zealand fell again, with 4287 homes sold in August down from 4411 in July.

"These sales levels are almost identical to what REINZ reported during 2008 when the market was at its worst in the midst of the Global Financial Crisis," said REINZ spokesman Bryan Thomson.

The August median selling price across New Zealand was $350,000, up a notch from $349,000 the month before. The average days taken to sell a house fell from 45 to 43.

"The days to sell statistics in particular suggest underlying market demand in a number of locations is being frustrated by potential sellers holding off from listing their properties for sale," said Thomson.

"Compared to 2008 our current market appears slower than conditions indicate it should be," says Thomson.

Consistent with anecdotes and the Reserve Bank's mortgage approvals data, today's REINZ report shows that housing market activity remained exceptionally subdued in August, said Deutsche Bank economist Darren Gibbs.

"Indeed, after allowing for seasonal and trading day factors, the number of house sales fell about 3 per cent during the month to the lowest level since January and was down 27 per cent year-on-year," said Gibbs.

"None of this should come as any great surprise to the Reserve Bank. The continued weakness in the housing market is one factor reducing the urgency for the Reserve Bank's policy rate (and ultimately borrowing rates) to be returned to levels that over the longer term will prove less stimulatory," he said.

ANZ economist Mark Smith said he had expected sales volumes to increase during August up but this did not eventuate.

"The low number of sales suggests there is not a lot of optimism currently in the housing market. The June and July hikes by the Reserve Bank would be one factor encouraging increasing caution by buyers," said Smith.

"With the Reserve Bank expected to remain on the sidelines for the next few months, the market might receive some support. The flattening in the mortgage interest rate curve in recent months may also entice more buyers into the market. Given the low numbers of sales, this cannot come too soon," he said.

Smith said earthquake impacts were likely to "significantly impact future monthly readings" from the REINZ survey.

"We are expecting a sharp fall in monthly sales for September, with the Canterbury market likely to be in limbo. This will make it very difficult for the RBNZ to make sense of the next few monthly readings," said Smith.

"Nevertheless, today's report is consistent with the spirit of the Reserve Bank's's July OCR review, which highlighted the caution of the household sector. We await Thursday's MPS (Monetary Policy Statement) with considerable interest."

The total value of residential sales in August, including sections, stayed steady at $1.8 billion.

The breakdown of the values of the properties sold is 139 for $1 million plus, 478 between $600,000 - $999,999, 1,070 between $400,000 - $599,999 and 2,600 for under $400,000.

- HERALD ONLINE