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REINZ reports 12% slump in sales volumes in June, but median price up 1.4%

REINZ reports 12% slump in sales volumes in June, but median price up 1.4%

The Real Estate Institute of New Zealand has reported there were 4,575 houses sold in June, down 12% from May and down 24% from June 2009.

(Update adds comments from ASB economist Chris Tennent-Brown).

The median price in June of NZ$352,500 was up 1.4% in June from May and was up 3.6% from June a year ago.

 The median number of days to sell rose to 45 in June from 43 in May and was up from 41 in June a year earlier.

However the volumes and the median days to sell were above the 4,305 and 53 days seen respectively in June 2008 at the pit of the housing and economic recession.

"The predicted post-Budget blues have not come to fruition and we are not seeing the forecast fall in prices," said REINZ President Peter McDonald.

"What we have is a genuine rather than a speculative market, with people seeking and buying homes to meet their own needs," McDonald said.

McDonald said the statistics should not be taken as an indicator individual house values are still rising. "They are purely the median of all sales during the month and can be impacted by the number of properties sold at either end of the price bracket," he said.

"The average gap between listing and selling prices last month was relatively small at only four to five per cent, which indicates successful vendors are being realistic in assessing the market value of their home."

The weak sales figures came as the Reserve Bank released figures showing mortgage approvals in the last week hit a record low and retail sales were surprisingly soft again.

See the full REINZ report and commentary here.

See the full REINZ tables of data here.

See the full House Price Index spreadsheet here, which show the stratified house price figures for New Zealand and various regions. They show prices falling in Auckland.

ASB economist Chris Tennent-Brown said he expected housing activity to remain weak for the rest of the year.

"Demand has weakened since last spring’s burst of activity for a variety of reasons. Tax changes have reduced the attractiveness of holding investment property, net migration is slowing, and interest rates have been rising," Tennent-Brown said.

"The tax changes announced in May do not seem to be triggering a wave of sellers, or additional. Other housing data show listings remain very low. Tight supply of houses for sale, combined with a low level of housing construction means that the market is not oversupplied with property. This is helpful for preventing a large drop in prices," he said.

"On balance, we expect prices to decline slightly over the year and for sales activity to remain muted."

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I said at the beginning of 2008 that house prices would fall 30% nationally within a couple of years. I predicted mortgagee sales, massive finance company collapses and a disaster for property developers. Some of that happened.

The REINZ stratified  median fell 9.1% between November 2007 and January 2009. The REINZ stratified median section price fell 21%. Some finance companies fell over in mid 2008.

Various development property and apartment prices have dropped more than 40% in many cases. Mark Hotchin told me in July 2008 that he didn't believe my forecast that values would drop 30%. He saw no appreciable drop in his values. He proceeded to try to keep Hanover Finance going on the strength of that forecast.

Guess I was wrong. His values have dropped much more than 30%.

In early 2009 after the worst of the financial crisis had passed it was clear the banking system was not going to collapse here, I revised my forecast for to a drop of 15% in national house prices from the peak over the next couple of years.

I'm sticking with that forecast.

We'll get there.