KEY POINTS:
Housing sales volumes collapsed 53 per cent in March from the same month a year ago to a record low for a March, data from the Real Estate Institute of New Zealand shows.
However, the median house price rose, largely because the number of sales of cheaper
houses slumped, skewing the median towards the upper end of the range.
The data shows the housing market in a full scale slump that will translate into significant price reductions for forced sellers, negative equity for some recent entrants to the property investment market, and a sharp slowdown in consumption spending linked to home equity withdrawal.
The figures will reassure the Reserve Bank of New Zealand that the housing market is slowing, but is unlikely to be enough to convince it to cut official interest rates, given the scale of the inflation problem faced by the central bank.
The median house price rose to 349,000 in March from NZ$337,500 in February and was not far off its November peak of NZ$352,000. It was just above its NZ$343,500 median in March a year ago.
The biggest shift came in the number of houses sold and in the median time to sell a house.
REINZ said there were 5,129 houses sold in March, down from 6,356 in February and down 53 per cent from the same month a year ago. This was a record low for a March and the lowest individual month since December 1999.
REINZ said a drop in consumer confidence among buyers of cheap houses and an early Easter holiday period were to blame.
"Easter reduced the month to just 18 business days, but there is no doubt that confidence has taken a knock especially in the lower end where sales of properties worth under $400,000, fell 23.18 per cent compared with the overall sales drop on February of 19.3 per cent," REINZ President Murray Cleland said.
"The explanation for this collapse of 'the bottom order', as one might say, probably lies in the fact that the lower end of the market is likely to be more affected by confidence issues and particularly some of the recent headlines, while the upper end of the market has relatively more resilience," Cleland said.
The median time to sell a property fell to 40 days in March from 50 days in February, but was up from 27 days in March a year ago.
Cleland said 7 of the 12 regions surveyed experienced lower median prices. "The unusual factors in March could not hide the fact that many prices around the country were weaker," he said.
"Add to that the likelihood of a growing number of properties coming on the market either through bank-forced sales, or through the collapse of property investment schemes, which will put more pressure on the market," he said.
The sharply lower sales volumes numbers are also bad news for mortgage brokers and real estate agents, who depend on commissions from sales numbers and mortgage numbers for their income. Some are predicting as many as a third of brokers and agents will have to leave the industry in the next year.
- INTEREST.CO.NZ
