House prices, sales numbers dive

January turned into a "buyers market" for houses in January with extremely low sales volumes, down to a seven-year low, and a sharp increase in days to sell properties, according top figures just out from the Real Estate Institute.

The national median price fell from $345,000 in December to $340,000 in January. The median is now down $12,000 from the recent peak of $352,000 in November 2007.

January is traditionally weak because people are away on summer holidays.

But sales volumes were unusually low at 5,186 which was the lowest volume since January 2001, compared with 7,566 in January 2007 and 5,597 in December 2007.

Days to sell ballooned out by 13 days to 49 days nationally, the highest since the January 2002 figure of 54 days.

Days to sell in January 2007 were 38 and December 2007's figure was 36.

REINZ National President Murray Cleland said latest figures suggested prices were going backwards, although January was the worst month for such interpretations because of its unusual nature.

"But it is clear from the days to sell and low sales volumes that there is a growing tension between the prices vendors are seeking and what buyers are offering - buyers have been quick to sense that the market is weakening and they are ready to take advantage of that situation".

House prices are being hit by a combination of extremely high mortgage interest rates, a sharp drop off in migration to New Zealand and a squeeze on household disposable incomes from rising food, power and petrol prices.

Auckland property commentator Kieran Trass predicted a big house price slump was inevitable and prices could fall as much as 25 per cent.

Most bank economists predict house prices will be flat to down about 5 per cent or so in the coming year.

House prices have doubled in the past five years, in one of the biggest house price booms ever seen.

- © Fairfax NZ News