Buyers take time as house sales slow

Houses are taking more time to sell and agencies are being swamped with listings as the residential market softens and buyers take longer to make up their minds.

But a sinking dollar may rescue the sector's fluctuating fortunes as foreign buyers swoop in.

Harcourts, the country's largest real estate agency, says it is awash with properties for sale while Barfoot and Thompson, Auckland's biggest agency, has just seen its sales volumes drop by a third.

Some economists are saying this is a further indication of the housing market's reversal of fortunes, as it slowly comes off a five-year high.

But the ever-depreciating New Zealand dollar appears to have given the market a boost, particularly on the North Shore where British migrants are greeting the currency shifts with glee.

Harcourts has noticed a jump in the number of national listings, a change sparked by a combination of slower sales and a rising tide of listings.

The agency's northern region, which includes Auckland, had 1908 properties for sale in February, up 5 per cent on February 2005. But fewer people were buying. Sales numbers were down 33 per cent, from 681 sales written in February last year to 458 sales in February this year.

The latest figures from Barfoot and Thompson, show February sales were 30 per cent down from the same time last year. But prices recovered from their January dip to reach an average of $464,092 which was 8 per cent ahead of a year ago.

Listings for the rest of the North Island and the South Island were also on the rise, with the number of properties for sale in Christchurch in February up 63 per cent.

Bryan Thomson, Harcourt's chief executive, advised vendors to market their properties better to make them stand out. The alternative was to drop prices, but he advised against this.

"The lift in properties available means sellers now have more competition to secure a buyer," Thomson said. "Sellers therefore must have realistic price expectations, prepare properties well and invest in quality marketing to make their property stand out.

Remuera-based agent David Rainbow of Bayleys said vendors were expecting too much for their properties. He predicted a softening New Zealand dollar would help bring more foreign buyers, particularly to Auckland.

New Zealanders living overseas would also be more encouraged to return, Mr Rainbow said. A Bayleys seminar in London last week drew an audience of more than 6000 people.

Darren Gibbs, chief economist at Deutsche Bank NZ, said the latest figures confirmed that the market was declining.

"The lift in Harcourt's listings fits with other anecdotal evidence, " Mr Gibbs said. "Clearly the market is headed back towards a more normal balance of demand and supply and with that I'd expect to see house price inflation slow abruptly "

BNZ chief economist Tony Alexander warned that a small improvement in net migration revealed last week was unlikely to help the housing market much.

"We have a theory that the net migration flows will turn downward later this year so I would not get too excited about the implications for housing of this recent small improvement," he said. "The data show a growing supply of sellers meaning buyers should be in no hurry to jump in and can instead take their time in a less panicked atmosphere."


Peaked or peaking?

Has the housing market hit its peak yet?
* Anthony Byett of ASB found sales volumes peaked in September 2003;
* Prices turned then too, dropping in Queenstown and Nelson.
* Prices appear to be peaking right now, around a national median of $300,000.
* Hindsight will show whether the peak was the December or March quarter.