House prices rise, but sales slow

The backlog of homes for sale suggests downward pressure on prices. Photo / Janna Dixon

A spring boost for the housing market was welcomed yesterday by Auckland's largest real estate agency.

Barfoot & Thompson director Peter Thompson said the price jump from $510,978 in August $523,861 showed the housing market was beginning to bounce back.

Sales are still low at 689 last month, well down on March's 927 sales, but Mr Thompson was optimistic.

"The average price we achieved in September was right in line with the average monthly sales price achieved for 2009.

"It points to prices being stable and is a pleasing return after the decline seen in August," he said.

Monthly sales numbers were still only "ticking over" and had not exceeded 700 in a month for four months.

Prices had moved with the return of spring, Mr Thompson said, "but sales remain quiet".

"For example, in September last year we sold a quarter more homes."

September's average weekly rent was $407, up only $1 a week on August but up $23 on September last year.

Barfoot rented 717 properties, up 2.3 per cent on last year.

Institute of Economic Research head economist Shamubeel Eaqub said it was hard to get excited about the numbers.

"House sales are low and falling," he said. Numbers of houses sold are down 25 per cent from last year. The level of house sales is consistent with slowing momentum in the economy.

"House sales tend to lead prices by about six months. This suggests house prices may be falling soon. Inventory of unsold homes continues to trend up. At the current pace of sales it will take nine months to clear the backlog of homes for sale. This suggests downward pressure on house prices.

"Recent reductions in fixed mortgage rates may be a positive.

"But a stuttering economic recovery is sapping confidence and there is little activity in the housing market."

A report from realestate.co.nz, which has 116,000 sale and rental house listings, said an expected spring surge failed to eventuate, and the number of deals rose by only 1 per cent on a seasonally adjusted basis from August.