KEY POINTS:
Property prices are now where they were a year ago, with house prices falling in eight out of 12 districts in May, says the Real Estate Institute.
Latest figures released by the institute show that national median prices fell 1.42 per cent from a year ago at $345,000.
REINZ National President Murray Cleland described the market as 'treading water' and showing signs of levelling off from what had earlier looked like an unpleasant trend.
Sales fell from 4,464 in April to 4,373 in May, down 52.9 per cent on May last year. The sales downturn was most pronounced in the north of the country.
But one bank economist, the ASB's Nick Tuffley, say the figures point to prospects of further price falls.
Tuffley said there seemed to be "some reluctance to drop prices to meet the market." He pointed out that while median prices on the face of it remain stable, the numbers were skewed in favour of the more expensive homes.
A much smaller number of sales were going through at levels below $400,000 which means the median price will be overstating the true level of house prices.
So the median price was steady, but the quality of homes sold in May this year was likely to be better than those sold in May last year.
"To hammer that message home, relative to last May there has been a 61 per cent decline in sales at the sub-$400k market but only a 28.5 per cent drop in sales in the $1mn+ bracket."
"A degree of Mexican stand-off remains in the market: buyers and sellers are having difficulty meeting in the middle, so turnover continues to decline both turnover and days to sell point to weakening demand." said Tuffley.
"Other evidence points to the stock of listings on the market continuing to build up.
We do expect at some point that house prices will have to do more of the work in clearing the backlog of stock, as will the decisions of some vendors to take their house off the market for a period."
When it comes to the implication for the Reserve Bank, Tuffley said the REINZ stats were "in line" with its expectations.
" The RBNZ expects a 7.7 per cent decline in house prices over the course of 2008, similar to our own. The RBNZ is also likely to expect prices to increasingly shoulder the burden of adjustment."
Tuffley said the data was consistent with the Reserve Bank easing interest rates as early as September.
The REINZ stats show Auckland sales fell 57.9 per cent from 3,300 in May 2007 to just 1,388 in May although this was slightly higher than the April sales of 1,350.
"April was a very weak month especially in relation to median prices, but in such a thin market any one month is not necessarily a good guide, but when you look at April and May together it seems that the market is finding a new level, albeit a very low one in terms of sales," said President Murray Cleland.
"It may well be that sales settle at this level over the next few months, until the Reserve Bank takes the pressure off interest rates, but the latest figure gives some comfort in terms of values, especially in the face of some of the more extreme predictions".
The length of time taken to sell a house increased from 44 days in April to 49 in May, compared with 30 days a year ago.
The national median price is now down 1.42 per cent on a year ago with the biggest regional fall being Northland, down 6.06 per cent, followed by Hawkes Bay, down 4.33 per cent and Canterbury and Westland down 2.29 per cent. Southland remains in the lead in positive territory, up 12.99 per cent on a year ago.
Your Area:
Northland: House sales down by more than half from a year before. Median prices fell from $359,000 in April to $310,000.
Auckland: Median house prices fell slightly to $447,500 from $450,000 a year before. The number of houses sold was up slightly from April, but down by more than half from 2007.
Waikato/Bay of Plenty/ Gisborne: Median prices fell to $310,000 in May, down from $315,000 in April and the same month last year. Number of house sales fell, down by more than half from 2007.
Hawkes Bay: Median prices fell to $265,000 from $275,000. The number of houses sold rose slightly.
Manawatu/Wanganui: Prices fell to $224,500 in May, down from $239,000 the month before, but up slightly from the year before.
Taranaki: Median prices rose to $285,000, up from $269,000 in April and $281,000 in May last year. The number of sales was down only slightly from April.
Wellington: Prices were up in the capital, hitting $388,000 in May, compared with $375,000 the month before and $385,000 in May last year. Sales volumes were down slightly from April, but down by half from last year.
Nelson/Marlborough: Median prices rose slightly to $337,000 in May, up from $336,500 in April and $328,000 in May last year. Volumes were down slightly from April.
Canterbury/Westland: Prices fell slightly to $298,000 from $300,000 in April and $305,000 last year. Volumes were down slightly from April, but down more than a half in 2007.
Central Otago Lakes: Median prices rose strongly to $490,000 from $454,000 the month before. This is up slightly from $485,000 last year. Volumes were up slightly from April, but down from last year.
Otago: Prices increased slightly to $240,000 from $235,000 the month before and the same median as May last year.
Southland: Prices fell to $200,000 from $215,000 in April, but well up from May last year, when the median was $177,000. Volumes eased slightly, but were down by nearly half from last year.
-NZ HERALD STAFF
