Housing prices take big slide

By ANNE GIBSON


Auckland average house prices are falling by almost $500 a day, with top-end market prices easing fastest of all.

Just two years ago prices were rising about the same amount.

Residents made richer on paper by the superheated market in the past three years are now watching their capital gains evaporate.

Prices fell for the fourth month in a row, and the luxury end of the market is slipping most quickly.

Homeowners with mortgages may face more difficult months, with the prospect of two interest rate rises this year.

The Institute of Economic Research's business survey found strong growth in September, which could prompt the Reserve Bank to increase its rates this month and in December.

Figures yesterday from the city's largest real estate agency, Barfoot & Thompson, show the average price reached a record $456,407 in May, but has been dropping since to reach $414,164 last month.

A decrease of $14,621 was recorded in September.

The turnaround is in stark contrast to September 2002, when Barfoots' figures showed homes were rising by an average $483 a day.

The number of houses being sold has also plummeted. Barfoots sold 918 houses last month, 30 per cent down on September last year.

People who own expensive houses are hurting the most.

During August, 23 per cent of Barfoot sales were of $750,000-plus properties, but last month they accounted for only 19 per cent.

The proportion of $1 million-plus properties selling also dropped from 15 per cent in August to 11 per cent last month.

North Shore mansion specialist Brian Guy, of Premium Real Estate, said his agency had also seen the luxury end tail off, but prices had not been affected.

"There has been a slowdown - it's taking longer to sell places and there is a decreasing number of sales," he said. "But that is not being reflected in prices."

Barfoot director Peter Thompson said the declining luxury market was pushing average prices down across the city and making the figures look worse than they were.

"This accounts for much of the average price decrease, rather than a general market decline," he said.

The sale of fewer high-priced homes last month reduced the average figures.

Average Auckland house prices dropped from $456,407 in May to $429,739 in June, $425,850 in July, picked up slightly to $428,785 in August and then fell to $414,164 last month.

"The September sales results are in line with the trend over the past few months of a return to more realistic market conditions," Barfoots said.

Real Estate Institute figures last month showed the national median price fell from $249,000 in July to $247,000 in August. Auckland's median fell from $340,000 to $336,500.

But the head of New Zealand's largest real estate agency, Harcourts, says people should keep house price movements in perspective.

"Last year's sales levels were at record highs, so with that in context, this year is not depressed, just perhaps more realistic," chief executive Bryan Thomson wrote in Harcourts' newsletter.

Although interest rates were up, they were still in the single-figure range and people who had real estate investments had their money in the world's most secure asset, Mr Thomson said. "Think long-term and there's no reason for concern."


But Harcourts' volumes are also falling - down 14 per cent in the northern region from 676 sales in August last year to 581 sales in the same month this year.


Beating interest

Andrew L'Almont of broker Mortgage Express advises people to fix their mortgage interest rates - quickly.

He predicts interest rates are likely to go up - possibly twice - before the end of the year.

So by fixing the rate, borrowers will have more certainty about repayments.

But they should leave some of the mortgage on a variable rate to give some flexibility.