Auckland house prices fall; pain 'still in pipeline'

Thursday 3rd July 2008

House prices in Auckland fell last month though the full extent of a downturn in the property market may still be to come, according to Shamubeel Eaqub, director of Australia & New Zealand investment research at Goldman Sachs JBWere (NZ).

The average sale price fell 1.7% in June from May and was down 2.3% year-on-year, according to real estate firm Barfoot & Thompson. New listings fell 19% year on year.

A cooling property market reflects the impact of the central bank's inflation battle, keeping borrowing costs high, while consumer confidence has tumbled and some economists are predicting the economy is in recession.

"The flow on impact of the decline in house sales is yet to be fully reflected in house prices, household consumption and residential construction," Eaqub said in a report today. "As such, the 'real' economic pain is still in the pipeline."

Overall house sales in the country are sliding, according to Statistics New Zealand. Sales fell 53% in May to the lowest level in more than a decade.

In Auckland, the number of house sales actually rose 16% in June from May, according to Barfoot & Thompson figures. Still, they were down 44.5% year on year.

"There is a clear pattern emerging where vendors are hesitating to list their properties for sale unless they have to," said managing director Peter Thompson. "We recorded 1,214 new listings in June, which is the lowest figure this year to date."

The average sale price for June was $525,316 and there were 556 transactions, Barfoot & Thompson said. That's down from 1,000 sales recorded in June last year though more than the 515 sales recorded in May.

By Jonathan Underhill

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