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

Wednesday 10th September 2008

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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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