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Median house price up but sales numbers fall

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, July 14 NZPA - The number of residential property sales fell in June, although the median price edged up, latest figures from the Real Estate Institute of New Zealand (REINZ) show.

The REINZ's housing price index -- basically an average of sale prices for common groups -- also rose last month, gaining 0.6 percent.

Compared to 12 months earlier, the index was 4.2 percent higher in June, while being 4.5 percent below the November 2007 peak.

The national median dwelling price last month was $352,500, compared to $350,000 in May and $340,000 in June 2009.

The national median number of days to sell increased from 43 in May to 45 in June, while REINZ recorded 4575 sales last month, down from 5206 in May and from 6040 in June 2009.

Deutsche Bank chief economist Darren Gibbs said that, after adjusting for seasonal and trading day factors, he estimated the number of house sales fell 4 percent in June from the month before, following a 1 percent month-on-month fall in May.

There had been no meaningful upward or downward trend in prices this year and home sales remained very low by historical standards, he said.

Turnover should broadly lift toward more normal levels as economic recovery broadened gradually.

"However, house prices seem likely to remain broadly flat in nominal terms for a number of years, thus declining relative to general prices and incomes, and moving valuations closer towards historical benchmarks."

ASB expected prices to fall slightly over the year but said the fact the market was not oversupplied was helpful for preventing a large drop in prices.

Goldman Sachs JBWere economist Philip Borkin said that despite the modest lift last month, house prices appeared to be under pressure.

"This should set the scene for an ongoing lacklustre domestic recovery, particularly with regard to consumer spending."

He did not expect a sharp fall in prices, for which a marked rise in distressed sales would be needed, and the probability of that happening was small.

REINZ president Peter McDonald said that predicted post-budget "blues" had not come to fruition and a forecast fall in prices had not been seen.

The fall in sales last month reflected the traditional winter slowdown of the real estate market, he said.

"What we have is a genuine rather than a speculative market, with people seeking and buying homes to meet their own needs," he said.

But Mr McDonald also noted the REINZ statistics should not be taken as an indicator individual house values were still rising.

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