April house price plunge seen as blip in rising trend

April saw house prices decline. File photo / NZ Herald

Barfoot & Thompson managing director Auckland's biggest real estate agency says $36,215 was shaved off its average sale price last month but dismisses this as an unusual change.

Peter Thompson, managing director of Barfoot & Thompson, said his business sold houses for an average $544,975 last month, down on March's $581,190, but that the difference was a singular or one-off occurrence.

"With April's average price being close to $3500 above that for April last year and the highest average price we have ever achieved in an April, it shows there is forward momentum in prices," he said.

In April last year, Barfoot's average sale price was $541,486.

"In each of the four months of this year, the average price achieved has exceeded that for its comparative month of the previous year. Other than for March, that increase has been modest, but there is a pattern of small gains," Mr Thompson said.

At the end of April, Barfoot's had 5580 properties on its books, the lowest number in six months, he said.

ASB economist Chris Tennent-Brown predicted a 4 per cent to 6 per cent Auckland house price rise between now and May next year. Barfoot's average sale price was often skewed by the composition of sales and the March price was boosted by a high proportion of expensive property sales, he found.

"In April, the record high average sales price eased, as the composition of sales returned to more normal ratios. As a result, the average sales price declined. Average prices within the B&T data over the past four months are up 2 per cent on the corresponding period a year earlier," he said.

Philip Borkin of Goldman Sachs said the housing market, particularly in Auckland, was benefiting from low interest rates. But housing affordability was stretched and household debt still high.

Low interest rates in the next year and demographic pressures would spark further modest improvements, he said.

"A stabilisation in house prices, if the early evidence to date solidifies, should eventually help households feel a little more comfortable with their financial situations."