Residential property prices in New Zealand are continuing to fall with the latest figures showing they increased just 0.3% in August.
It means that in the three months to August prices measured by the Real Estate Institute of NZ (REINZ) have fallen by 1.2% but they have increased slightly by 0.9% compared to August last year.
Real estate prices in New Zealand are now 5.3% below their peak of November 2007 with Christchurch performing the best as prices in August were 5.3% above those in August last year.
In Auckland prices are up 0.7%, in Wellington they are up 0.8% and other South Island suburbs have seen a rise of 1.6% on the same period. Prices for other North Island suburbs fell 1.7% from the levels seen last year.
Sales are also slowing. The index shows that the number of sales across New Zealand fell with 4,287 homes sold in August down from 4,411 in July.
‘These sales levels are almost identical to what REINZ reported during 2008 when the market was at its worst in the midst of the global financial crisis,’ said REINZ spokesman Bryan Thomson.
The August median selling price across New Zealand was $350,000, up slightly from $349,000 the month before. The average days taken to sell a house fell from 45 to 43 days.
‘The days to sell statistics in particular suggest underlying market demand in a number of locations is being frustrated by potential sellers holding off from listing their properties for sale,’ explained Thomson.
‘Compared to 2008 our current market appears slower than conditions indicate it should be,’ he added.
Consistent with anecdotes and the Reserve Bank’s mortgage approvals data, the report shows that housing market activity remained exceptionally subdued in August.
‘Indeed, after allowing for seasonal and trading day factors, the number of house sales fell about 3% during the month to the lowest level since January and was down 27% year on year,’ said Darren Gibbs, an economist at Deutsche Bank.
‘None of this should come as any great surprise to the Reserve Bank. The continued weakness in the housing market is one factor reducing the urgency for the Reserve Bank’s policy rate, and ultimately borrowing rates, to be returned to levels that over the longer term will prove less stimulatory,’ he added.
According to ANZ economist Mark Smith the low number of sales suggests there is not a lot of optimism currently in the housing market. ‘The June and July hikes by the Reserve Bank would be one factor encouraging increasing caution by buyers. With the Reserve Bank expected to remain on the sidelines for the next few months, the market might receive some support. The flattening in the mortgage interest rate curve in recent months may also entice more buyers into the market. Given the low numbers of sales, this cannot come too soon,’ he added.
