Residential property sales nearer to normal: REINZ

Residential property sales last month were closer to 2009 levels after in January reaching their lowest level in nearly two decades, Real Estate Institute of New Zealand (REINZ) figures show.

In February, the nationwide median price remained steady, with the monthly total of 5029 dwellings sold well up on the January figure of 3666, but down from 5228 sales in February 2009.

The median sales price of $350,000 last month was the same as in January, and up from $330,000 a year earlier, figures published today show.

REINZ president Peter McDonald said agents reported an air of caution among buyers, most of whom were genuine home seekers as opposed to investors. That was reflected in the rise to 46 in the median days taken to sell a listed dwelling, he said.

In January a median 43 days were needed to sell, while in February 2009, 62 days were needed and in February 2008 it was 50 days.

Mr McDonald said recent government discussions of potential tax changes had halted inquiries from investors who usually bought at the lower end of the price range. Most interest now was in the $400,000 to $600,000 bracket.

"We are seeing a good supply of listings and high levels of inquiry so we expect the market to remain reasonably balanced and maybe strengthen as we move into the autumn months."

Deutsche Bank chief economist Darren Gibbs said the housing market was being held back by a recovery in the broader economy, especially the absence of a notable improvement in the labour market, along with the earlier rebound in both house prices and longer term mortgage interest rates.

As the broader economy recovered, and the labour market stabilised and confidence consolidated, he expected the recovery in housing turnover to resume in coming months, particularly if net migrant inflows continued at recent levels.

After adjusting for seasonal and trading factors, he estimated the number of house sales fell 2 percent month-on-month in February, following monthly declines of 6 to 8 percent for each of the previous four months.

In Auckland, house sales rose about 2 percent month-on-month, but fell about 5 percent in the rest of the country.

ASB economist Jane Turner said today's figures confirmed the housing market was losing momentum, with the level of sales remaining low.

A steady climb in days to sell from lows in October suggested the balance between supply and demand was returning to normal, following a period of under-supply through spring, she said.

The lift in supply in house listings should reduce pressure in the market, and house prices were likely to ease in 2010 following surprisingly strong gains in 2009.

She expected house sales and prices would be weighed down by uncertainty about tax changes until the budget at the end of May.

ANZ said sales volumes were close to historical lows as a proportion of the housing stock.

The REINZ monthly housing price index, which looks at an average of sale prices for common groups, rose 0.4 percent last month, but declined 1.2 percent in the three months to February.

Compared to 12 months earlier, the index was up 5.5 percent, while housing prices were 4.9 percent below the November 2007 peak.