House sales volumes fell by a record amount in the first half
of 2008 and the South will be the hardest hit by a downward
spiral in house prices, a report by economic consultants
Infometrics shows.
Findings released today show property sales volumes slumped
44.3 percent compared to the same period in 2007, exceeding
the previous record decline of 39.4 percent set in the second
half of 1974.
The data is in a report prepared for mortgage insurer QBE
Lenders' Mortgage Insurance.
A downward trend in median house prices has developed since
2007 with the Christchurch, Hawke's Bay and
Taranaki/Manawatu/Wanganui regions experiencing the worst
home value declines over the year to June 2008.
Nationally, the average price over the three months to August
2008 was 3.1 percent lower than a year earlier.
Infometrics senior economist Gareth Kiernan said the annual
price decline was the first across the country since 2001.
Looking forward, annual growth in the median house price
could dip as low as minus 10 percent in early 2009 and
nationally, prices were forecast to fall 5.8 percent by June
2009, he said.
Otago/Southland with -9.5 percent, Northland with -9.1
percentand Nelson/Marlborough with -7.6 percent were expected
to experience the most pronounced fall in house prices to
June 2009.
Christchurch with -3.3 percent and Hawke's Bay with -3.2
percent would experience the smallest declines.
Turning to the rental market, gross rental yields lifted from
a low of 4.3 percent in May 2007 to 4.7 percent by August
2008. Rental yields, driven by strong national demand, were
at their highest in over three years.
Higher interest rates, economic recession, increases in food
and fuel prices and drought pressures affecting the
agricultural industry were seen as catalysts for the
slowdown.
QBE LMI chief executive Ian Graham said that with interest
rates on the way down, a pick up in business and consumer
confidence, and vendors revising their price expectations,
sales volumes were expected to recover from their current low
level.
"More buyers are likely to be drawn back into the market in
2009-2010 in search of housing bargains," he said.
