House sales, prices fall in December

House prices dropped 2 per cent in December and sales fell by a third, further evidence the heat has come out of the property market.

The national median sales price fell to $345,000 in December from $352,000 in November.

The rise in the median price in 2007 was just 4.5 per cent compared with 11.9 per cent in 2006.

There was also a drastic fall in house sales, with sales down 32 per cent on December 2006, to 5597.

Real Estate Institute (REINZ) national president Murray Cleland blamed the holiday break, interest rate rises and slowing immigration for the fall.

The median number of days to sell a house remained steady at 36.

Mr Cleland put a brave face on the slump saying "despite some commentators' predictions, there is no discernable erosion of property values".

"While successive interest rate increases have impacted on the number of properties sold; prices remain steady.

"This suggests the market may have reached a peak and is now levelling off after a very strong performance over the last seven years."

He noted the median price had more than doubled from $170,000 in December 2000.

Prices generally remained buoyant in the north and depressed in the south during December.

The median price fell 8.6 per cent in Southland to $191,000, 6.4 per cent in Otago to $250,000 and in Central Otago Lakes by 2.6 per cent to $419,000.

Wellington was the other region to take a big hit, with the median price dropping 6.3 per cent to $370,000.

Meanwhile, the median price in Northland rose 8.9 per cent to $335,000. The Auckland price rose 2.2 per cent to $460,000 and Waikato/Bay of Plenty prices by the same margin to $330,000.

Seven of the 12 regions recorded an increase in the median price in December while 10 of the 12 regions had increases over the year.

Prices in Taranaki and Central Otago Lakes fell over the year, while prices in Southland rose 27.33 per cent; Northland, 15.31 per cent; Manawatu/Wanganui, 13.48 per cent; and Waikato/Bay of Plenty, 10.00 per cent.

Mr Cleland predicted the market would pick up with sales increasing in February and March after the summer holidays.

"However, it is unrealistic to expect the stellar increase in prices as seen over the past seven years to continue indefinitely with the market now entering a period of consolidation."

He warned that further increases in interest rates would likely result in buyers becoming even more cautious and potential vendors possibly deciding to hold off selling, meaning fewer sales than expected over coming months.

Westpac Bank this week predicted two more rate rises by the Reserve Bank this year.

- NZPA