House sales likely to stay depressed: economists

Photo / Adrian Malloch

Winter, low immigration numbers and rising mortgage interest rates are being blamed for the state of Auckland's housing market.

Barfoot & Thompson's monthly data showed depressed sale levels, falling from 665 deals in June to 644 last month, and economists predicted it would stay that way for some time.

Philip Borkin of Goldman Sachs JBWere said the sector was subdued, and Shamubeel Eaqub of NZIER said the level of house sales remained extraordinarily weak.

"Slowing net migration and rising mortgage rates suggest the residential property market will continue to face headwinds for some months yet," Mr Eaqub said.

Peter Thompson, Barfoot managing director, emphasised the need for vendors to get their pricing right when they listed and said the market has found its winter "ticking over" point.

"Properties are continuing to sell, particularly if they are priced to meet the market," Mr Thompson said.

"We are attributing the increase in average sale prices to a higher than usual number of homes selling at more than $750,000 in July," he said.

"Until winter is behind us, we anticipate market conditions will remain the same," Mr Thompson said.

Barfoot's figures showed average Auckland weekly rents hit an all-time high, increasing $5 a week to $408 a week.

"The average rent for July is now $20 a week higher than the average for July last year," Barfoot said.

Landlords were facing higher costs.

Mr Borkin wondered if rent rises were in response to tax changes.

But he said gradual rent recovery at a time of limited house price growth was improving some of the key fundamentals in the property market.

RESIDENTIAL DEALS

January
Sales - 583
Average price - $505,301

February
Sales - 626
Average price - $521,323

March
Sales - 927
Average price - $545,156

April
Sales - 671
Average price - $541,486

May
Sales - 792
Average price - $542,806

June
Sales - 665
Average price - $523,058

July
Sales - 644
Average price - $534,389

- Source: Barfoot & Thompson