Property market remains 'soft'

A 3 percent rise in the national median house price in March to $360,500 has failed to impress economists, with suggestions the market is flat and prices are trending downward.

Real Estate Institute of New Zealand data out on Friday showed the median price rising $10,500 last month, while the 6161 sales in March was the best result since last September and the number of days to sell fell to 35 from 46 in February.

ASB economist Chris Tennent-Brown said March was usually one of the strongest sales months, and when the data was seasonally adjusted the market remained flat last month, after a drop at the start of the year.

When the figures were adjusted, turnover was up 0.9 percent on February but down 8 percent on a year earlier, while days to sell shortened from 39 in February to 38 in March, the long run average since the data series started in 1992.

The national median price was at an all time high but was affected by the composition of sales, he said

"The soft patch for housing turnover continues, with the latest REINZ turnover figures showing little recovery after falling sharply at the start of the year," Mr Tennent-Brown said.

The seasonally adjusted figures did not suggest a strong autumn bounce back, instead showing a market still positioned slightly in favour of buyers.

ANZ economist Mark Smith said that while prices did tick up slightly in March, that followed weakness in February, with the trend in house prices now downward. He expected prices to fall in coming months.

Uncertainty about possible tax changes, to be announced in the budget next month, were clearly weighing on the housing market, he said.

A rebound could be expected later in the year, once the tax changes were made clear. That should see pent-up demand being unleashed.

The unadjusted national median was 7.6 percent higher than the year ago figure of $335,000, although just $500 ahead of the figure in December.

Reinz president Peter McDonald said the national median was rising due to strong demand from genuine home buyers, and despite an abundance of good listings.

"What is happening now is in strong contrast to the market in November when listings were short and prices went up because demand was not being met," he said.

Auckland had the biggest annual national median rise, lifting 9.3 percent to $475,500, followed by Wellington with an 8.8 percent rise to $409,000, and Taranaki with a gain of 8.5 percent to $280,000.

Reinz's housing price index rose 1.7 percent in March, although falling by 1.3 percent in the three months to March.

The index, which basically looks at an average of sale prices for common groups, was up 6.8 percent from a year ago, but 3.3 percent below the November 2007 peak.

- NZPA