KEY POINTS:
Home-owners have been hit by a triple whammy as latest figures reveal a dramatic slowdown in the market.
According to latest figures, prices are rising only fractionally, homes are taking longer to sell, and sales have plummeted to a six-year low.
The Real Estate Institute, which released the statistics, remained upbeat, saying the slide in sales had supported prices and "defied critics".
But analysts said there was no question market momentum was weakening and said it was only a matter of time before it had an impact on house prices.
That is likely to mean good news for those trying to buy, with one economist suggesting prices could drop by as much as 3.5 per cent in the final quarter of the year.
And those shouldering the mortgage burden could enjoy a cut in the interest rate by the latter part of next year, said another.
The residential market report shows that across the country 5894 homes sold in September - the traditionally buoyant spring season. That's the lowest number since 5550 were sold in September 2001 and almost 3000 less than in the same month last year.
And in the biggest market of Auckland, the number of house sales has dropped by a third, compared with last September.
Prices have continued to rise, though, with the national median up to a record high of $351,000, but that is only a $1500 increase on the previous month. And in Auckland, the median price has dropped by $8500.
Meanwhile, it took an average of 32 days to sell each house, compared with 31 days a year ago. In the peak of the housing boom, that dropped as low as 24 days in 2003.
Murray Cleland, national president of the institute, said the national median had edged to a new record, which "defied the critics".
"Most commentators have been predicting a slowdown in annual housing price growth, and while that is the long-term trend, the fact is that it is still sitting at 12.3 per cent - a little lower than August on 12.9 per cent, but up on July which was 10.4 per cent."
And he argued the slide in sales had probably helped support prices.
But Goldman Sachs JBWere economist Shamubeel Eaqub said the figures signalled a clear slowdown of the property market.
"The typical lagged relationship between house sales and house price inflation suggests house prices could fall by 3.5 per cent (in the fourth quarter of this year)."
Mr Eaqub pointed to higher interest rates and slowing net migration as the cause of the slowdown.
And he warned it left a risk of a "rapid unwind of the housing market [which] could have a significant negative wealth impact".
Citigroup's director of economic and market analysis Annette Beacher said house price inflation was still well above the Reserve Bank's "target of zero". She said there was a lack of "distress sales" at the bottom end of the market, which suggested consumer confidence and that higher mortgage rates had yet to bite.
Mr Cleland said the plateauing of house prices meant a "cross-over" point was being reached where buying an existing property was a better option than building a new home.
