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Winter malaise sets in as Auckland house sales slump

Monday 5th July 2010

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Auckland house sales slumped last month as winter malaise set in among buyers amid declining demand in the property market.  

The number of sales sank 16% to 665 in June from a month earlier, and was down 23% from a year ago, according to Barfoot & Thompson, Auckland’s biggest real estate firm. The average sale price dropped 3.6% to $523,058 month-on-month, and was up an annual 0.2%.  

“Housing market activity is likely to remain very weak throughout the remainder of 2010, reflecting waning demand,” said Jane Turner, economist at ASB Bank.

“Given the weakening fundamentals we expect to see house prices decline slightly this year, however, the low level of supply, as indicated by weak consent issuance and the low level of new listings, will limit the degree of downside pressure on house prices.”  

House prices are expected to fall at an annual pace of 2% for the next two years with several years of subdued sales volumes, according to Westpac. That comes after the government clamped down on tax benefits for property investors in its May Budget, while the Reserve Bank embarked on tightening monetary policy.  

Barfoot chief executive Wendy Alexander said the Budget contributed to lower sales, but didn’t have much impact on prices.  

The firm added 1,194 new listings in June, down 13% from May, and had 5,794 properties on its books at the start of July. At the start of June, it had 6,023 properties on its books, and on July 1, 2009, it had 5,597.  ASB’s Turner said new listings had been “very subdued” for some time.  

Barfoot’s average weekly rent rose to $403 last month from $398 in May and $388 a year earlier. It rented out 690 properties in June, up from 649 a month earlier, though down from its 735 in 2009.  

Turner said anecdotally, landlords have been lifting rents in response to the Budget’s tax changes, though “the ability to increase rents may be limited by prospective tenants’ ability to pay given the weakness in wage growth over the past year”.

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