House sales volumes plunged to their lowest levels in almost 20 years in January, but house prices fell only slightly, down 1.6 per cent, according to Real Estate Institute figures.

Real Estate Institute president Peter McDonald said the 3666 homes sold in January was the lowest monthly total since electronic records began in 1992 and was only the second time the total figure had dipped under 4000.

The market was quiet because of uncertainty about the government's plans following the Tax Working Group report recommendations on property late last year.

This week, the government ruled out a land tax and comprehensive capital gains tax on property, but tax experts believe there will be action on depreciation deductions. Details are expected in the May Budget.

"Hopefully the market will start to pick up now things are a bit clearer after the Prime Minister gave his opening speech to Parliament on Tuesday," Mr McDonald said.

January's total sales of 3666 was 40 fewer homes than were sold in January last year, the first time total dwelling sales fell below 4,000 and 1291 down on December 2009.

Despite the dive in house sales, the REINZ Housing Price Index fell by 1.6 per cent to 3201.8 in the January 2010 month.

In the three months to January, housing prices increased by 0.6 percent. Compared with 12 months earlier, the REINZ Housing Price Index increased by 6.9 percent. Housing prices were still  5.3 per cent below their November 2007 peak.

In Christchurch, housing prices in January were 12.9 per cent above those in January 2009 with housing prices in Auckland (up 8.5 per cent), Wellington (up by 4.8 per cent), other North Island suburbs (up 5.1 per cent) and Other South Island suburbs (up by 4.9 per cent) also up from the year earlier levels.

The Index is put together using a technique known as stratification, which is an average of sale prices for common groups of properties. It is aimed at giving a more accurate picture of real house price movements, rather than a change in the overall median price.

- © Fairfax NZ News