House sellers keep cutting asking prices in buyers market, realestate.co.nz report shows

Realestate.co.nz's monthly report for July shows house sellers are still cutting asking prices as inventory levels remain at high levels in a buyers market.

Asking prices fell 1.1% on a seasonally adjusted basis in July from June and have been cut 5.2% in the last four months as sellers adjust their expectations in the face of high inventory levels and weak buyer demand. the report published on unconditional shows.

Over the 12 months to July 2010 a total of 145,733 new listings came onto the market, up 8.5% from the same period a year ago.

(Updated with ASB economist Jane Turner's comments on the figures and forecast of a 3% fall in house prices in the second half of 2010)

"This strength of listings matched to the existing stock of unsold houses is challenging for property owners looking for buyers in what is a very slow paced market," Realestate.co.nz CEO Alistair Helm said in the report.

However, he said the figures in July showed the first signs of some balancing as new listings fell to 10,586 in July from 11,106 in June.

This was down 2.3% on a seasonally adjusted base. The level of unsold houses at the end of July was 52,404, up slightly from June. This represented the equivalent of 46.8 weeks worth of sales.

"The inventory levels had been beginning to fall over the preceding two months, but this month saw a slight correction."

This suggests that even though the number of new listings fell in July, the number of sales was even weaker than in previous months, meaning the inventory of unsold houses rose again.

ASB economist Jane Turner said the figures showed new listings at relatively low levels.

"There has certainly been no “landslide of sellers” following the change in tax policy around depreciation rules," Turner said.

"Further, the level of listings remains quite low despite the pick up in number of permanent departures (particularly to Australia)."

"Over the first half of the year, the relatively low number of new listings has held the total supply of housing on the market at manageable levels, preventing house prices from falling despite weak demand," she said.

"The level of seasonally-adjusted listings, at 55,346, has returned to mid-2008 levels (when the housing market was previously at its weakest). The rising supply of unsold houses will continue to push the market out of balance, putting pressure on house prices. We expect to see house prices fall around 3% over the second half of the year, after remaining surprisingly steady over the first half of the year."