House sales tumbled in January

Friday 13th February 2009

House sales tumbled in January while properties took longer to sell, suggesting uncertainty about the economic outlook is damping demand even as mortgage rates fall.

The total number of homes sold nationwide last month fell to 3,706, down from 4,302 in December and a drop from 5,186 in January 2008, according to the Real Estate Institute of New Zealand. The median house price slipped to $325,000 from $328,500 the REINZ said.

The length of time taken to sell a house rose to 59 days in January, the longest since 2001, from 45 days in December. It took 49 days to sell a house in January last year. Reserve Bank Governor Alan Bollard has slashed the benchmark interest rate, helping drive down mortgage rates, and has said further reductions are possible this year as global growth slows and inflation abates.

The sales data "is clear evidence that people are treading cautiously and reflects the uncertainty of the wider economic environment," said REINZ president Mike Elford. Falling interest rates "had yet to have the effect of revitalising the market."

Mortgage lenders have slashed interest rates since the central bank last July embarked on its steepest easing cycle since introducing the official cash rate in 1999. ANZ Bank is offering a one-year fixed rate home loan at 5.79%, down from almost 10% in mid-2008, according to the goodreturns.co.nz website.

By Jonathan Underhill

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