NZ house sales sink to 26-year low; prices fall

Wednesday 10th September 2008

New Zealand house sales sunk to a 26-year low in August and the average price fell almost 3%, suggesting a deepening slump in the property market as the economy slows.

Some 4,220 houses sold last month, the lowest since the Real Estate Institute began compiling figures, it said in a statement. The national median house price fell to NZ$330,000 from NZ$340,000.

�It looks as if the leading economists are on the money with predictions of a 5% to 10% decrease in the market, REINZ president Murray Cleland said. �Much will depend on the Reserve Bank�s decision tomorrow on the official cash rate and the expected decrease will take the pressure off mortgage rates.�

Reserve Bank Governor Alan Bollard is expected to cut the OCR by a quarter point to 7.75% tomorrow, with some economists predicting a 50 basis point reduction. The economy may have contracted for a third quarter this year, the Treasury said in its monthly report out this week. Growth may return in the fourth quarter, it concluded.

There may be a glimmer of hope in the REINZ�s latest report, which showed a drop in days to sell to 55 days last month from 58 days in August.

Also, the median house price in Auckland actually rose in the latest month, to NZ$423,500 from NZ$421,000. That put it among three regions out of 12 where the price increased. In Wellington the median price rose 1.1% to NZ$375,000 and in Southland it rose 10% to NZ$190,000.

To view the residential highlights in your region on Landlords.co.nz, click here

By Jonathan Underhill

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