Houses hit as buyers stay away

High interest rates, two long holiday weekends, long school holidays and many weeks of hot weather have combined to drive buyers away from the housing market.

Harcourts, the country's largest real estate agency, saw its sales volume drop 30 to 40 per cent last month and chief executive Bryan Thomson is blaming a combination of factors.

He said many agencies were reporting an extremely slow start to the year.

Auckland's biggest agency, Barfoot & Thompson, reported the slowest January in five years, and blamed interest rate rises.

Peter Thompson, a Barfoot director, also said two holiday weekends influenced the slow start to the year, with property marketing campaigns being delayed until later this month.

Barfoots sold 797 houses last month, well down on the firm's usual monthly figures of about 1000 sales.

Last month was the slowest for sales since January 2001, said Mr Thompson.

Listings, at 1262 last month, were also down, from 1485 in January 2001, 1598 in 2002, 1581 in 2003, 1851 in 2004 and 1275 in 2005.

Prices fell from an average $492,882 in December to $428,385 last month. Prices dropped 9 per cent in the year to January and Mr Thompson said high-priced houses were hardest hit.

"Last year, 21.4 per cent of all properties we sold were for $750,000 or above, compared to 18 per cent in January.

"It's a similar picture with properties over $1 million. Last year, they represented 12.9 per cent of our sales but that figure was 10.7 per cent for the first month of this year," Mr Thompson said.

The market had clearly tightened and last year's round of interest rate rises was having an effect, he said, adding that the city had a choosier pool of buyers.

But landlords appeared to be doing well out of the changing market conditions. Barfoots rented 766 houses last month for an average of $348 a week, up on the average $347 in December.

Real Estate Institute figures out last month also showed a slowdown. The national median price fell from a record $300,000 in November to $295,000 in December. The number of sales in the Auckland region dropped a third, from 3107 in November to 2123 in December.

Tony Alexander, BNZ chief economist, said negative factors would dominate the housing sector in the second half of this year, including slower population growth, consumer worries about job losses, potential investors preferring term deposits and waiting for a house price correction, existing investors growing tired of waiting for rent rises and deciding to quit their stock, and a falling exchange rate.

Brian Guy, chief executive of Premium Real Estate at Takapuna, said his firm sold one $3 million property last month and a $2 million house in Sanders Ave near Takapuna Beach.

"The top end's a bit skinny, particularly for buyers in the $5 million range. There's a levelling-off at that really high end, which is not as good as we might have experienced in the last two or three years."