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Auckland home sales fall to 10 year low, prices rise

Thursday 6th November 2008

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The number of homes sold in Auckland tumbled to the lowest level in at least 10 years, suggesting the prolonged economic slump is denting demand for property.

There were 503 sales in Auckland in October for real estate agents Barfoot & Thompson, down from 559 in September. The volume of sales dropped from 796 in October 2007. The average sale price rose to NZ$520,039 from NZ$495,873, the firm said in a statement.

The drop in sales may reflect fall-out from the global credit freeze and some hesitancy before the election this weekend, said managing director Peter Thompson. "There was an overall slowdown in the market during October, but we are hopeful that some of the uncertainty will be resolved by the general election this weekend," he said.

While sales fell, Barfoot & Thompson had a record month for property management, with 691 properties let for an average weekly rent of $385. Rental activity "suggests there is a group of potential buyers out there who are holding off at the moment and choosing to rent instead," Thompson said.

Government figures show building consents fell 0.8% in September, excluding apartments, Statistics New Zealand said on October 30. The trend for the number of new dwellings, including apartments, has fallen 41% since mid-2007 to the lowest since January 1983.

Economists expect the central bank will cut the official cash rate at least 50 basis points in December, adding to its record 100 basis points cut last month, to revive an economy that may extend its recession through to the end of the year.

Still, the impact on mortgage rates may be muted initially, as banks tend to fund their loan books from funds sourced overseas.

By Jonathan Underhill

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