KEY POINTS:
Relax - we're up in the long term. Prices might be down right now but New Zealand's housing stock has doubled in value in the past decade.
Latest house-price drops pale compared with the rises we have enjoyed over 10 years.
The Economist's global house price survey has ranked New Zealand as one of the worst-performing markets over the past few months, falling 6.8 per cent last year.
However, this is offset by it being one of the fastest-growing in the boom times since 1997. Our house values rose 105 per cent between 1987-2008 and have only dipped recently. Many analysts predict the market will bottom out later this year before strengthening.
Peter Thompson, Barfoot & Thompson director, said price changes had not been as dramatic in New Zealand as many people thought.
The market had moved only fairly marginally on price, he said. The biggest change was in the volume of sales. Real Estate Institute members' January sales volumes were the lowest since 1992, figures released yesterday show.
Barfoot's highest average monthly sale price last year was May's $534,254 and last year's average sale price was $513,597. In January, that dropped 9 per cent to $502,636 but Mr Thompson said this was still around the same level as in the final quarter of last year.
Bryan Thomson, chief executive of Harcourts, which runs 180 offices, said it was wrong to fixate on January because that was usually a slow month.
Only when the February prices were out would people begin to get a better fix on the market, he said.
The national median dropped from $328,500 in December to $325,000 last month and days-to-sell pushed out from 45 days to 59. Just 3706 houses were sold nationally in January, a 28 per cent fall from January 2008 when 5186 houses sold.
Tony Alexander, BNZ's chief economist, said that sales had probably reached their weakest levels and would fluctuate before drifting upwards before the end of the year.
After that point, he predicted, house prices would again begin to stabilise and then rise slightly next year.
Last year, house prices dropped most in the United States: down 18.8 per cent. The US, where the sub-prime crisis sparked massive loan foreclosures, is now facing rising unemployment, a trend which initially dogged poor families who had been seduced by unaffordable loans but is now spreading to the middle classes and up.
"In America, the collapse is striking both for its severity and its breadth: home prices fell in every city covered by Case-Shiller's 20-city composite index," The Economist said.
In Britain, where houses are staying on the market for a year until they sell, house prices fell 13.9 per cent.
Ireland, called the Celtic Tiger for its long period of impressive economic growth, has seen house prices fall by 10 per cent.
New Zealand's ranking on the latest chart is a big change from earlier last year when the magazine showed how our market was holding up better than most of the rest of the world's.
Then, we ranked eighth out of 20 countries for our annual house price increase. The round-up of the data implied any "crash" was far from universal but the magazine warned that soon it expected far more countries to feature negative price growth.
YOUR HOME, YOUR CASTLE
New Zealand has:
* About 1.4 million houses.
* Valued at $460 billion.
* $328,500 median price.
