Property market strong but prices will tighten

The property market will remain strong but vendors will have to be flexible on prices, real estate agency Barfoot & Thompson predicts.

Director Peter Thompson said sales volumes this year would be similar to last year's but there would be a plateau in the average sales price.

New Zealand's image as a haven, which grew after the September 11 terrorist attacks in the United States, remained a drawcard for expatriate New Zealanders and immigrants, he said.

Other factors, such as low unemployment, were also contributing to continued confidence. Overseas, people are still investing in New Zealand property.

Thompson said he did not expect the real estate boom to continue at the same level as last year. "We are still ahead of the volumes of last year but the average sale price will tend to level," said Thompson.

"There could be a period of time - it could simply be one or two months - where the vendors hoping to get unrealistic prices are going to have to be more realistic."

Thompson said Auckland house prices were lower than those in Sydney and Brisbane and offered value for money. The level of interest rates was the greatest concern to his industry.

Barfoot & Thompson, founded in 1923, is 100 per cent family owned and operates in Auckland and Northland. About one in three homes on the market in greater Auckland is sold by the agency.