Real estate 'mini-boom' rubbished

Real estate group First National is rubbishing talk of a property market "mini-boom".

Figures published by the Real Estate Institute of New Zealand on Friday showed the national median house price at a new high in October of $355,000, nearly 6 percent above a year earlier, and $5000 higher than September.

The time taken to sell improved to a national median of 31 days last month, compared to 33 in September and 47 a year earlier.

The 6091 properties sold last month was down from 6464 in September, although well up from the 4469 sold in October 2008.

But despite thses encouraging stats, First National said "descriptions of the New Zealand real estate market having a mini-boom are absolute rubbish".

"There are a few well presented houses in each market sector, suburb and price bracket that people are fighting over but there are fewer houses selling overall," First National general manager John Stewart said.

"Those not winning the battle for these prime properties are sitting back and waiting for the next `cherry' to pick whereas during boom times they rush off and buy the next best." In First National's experience, and while there was regional variation, most homes were still selling at 10 to 15 percent less than two years ago, Mr Stewart said.

That was not changing as quickly as some commentators had been saying in recent days.

"Perhaps the bank economists are trying to justify interest rate increases." He was concerned that at a time when a new law for real estate agents was about to come into force, aimed at increasing professionalism in the industry, such "emotional and ill-informed commentary" was coming from supposedly responsible bodies.

"To base a view that real estate is in a boom cycle and needs reining in on such low sales volume and around the results of competition for the precious few well priced and presented properties in each market is unprofessional." Comparing six-monthly averages, First National's volumes had plateaued at 40 percent below the peak of 2007, although they were 21 percent higher than the lows of last year's slump.

"People are blaming lack of listings for limiting sales but in areas where listings have improved, sales volumes have not always followed indicating many buyers are still wary of committing themselves," Mr Stewart said.

Houses under $400,000 made up the bulk of sales activity and it was a concern that volumes in that section of the market were dropping in many areas.

In contrast to Mr Stewart's warnings, respondents to ASB's housing confidence survey for the three months to October, shows housing confidence staying strong, with a marked shift in house price expectations.

In the latest survey a net 40 percent of respondents expect house prices to rise. That can be compared to the three months to April when a net 45 percent expected a fall in prices.

The turnaround was the largest recorded in the survey so far, ASB said.

ASB chief economist Nick Tuffley said the latest survey results were consistent with responses normally seen during a "very upbeat" housing market.

"Optimism is high and a clear majority of respondents expect prices to rise over the next year," he said.

"In a number of respects the housing market is looking in strong shape. However, the level of activity remains relatively subdued. The main issue in the market is supply constraints.

"It is certainly becoming a sellers' market at present. Houses are selling quite rapidly again, back to the low times taken to sell that prevailed during the years of the housing boom.

"The market has moved back into the stage in which house buyers have to act fairly quickly if they want to secure a property.

"Prospective buyers face competition for houses, a contrast with a year ago. Consequently, prospective buyers are bidding up house prices to secure properties."

 

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