Housing market sluggish as Budget looms

Last updated 05:00 10/05/2010

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House buyers and sellers are sitting on their hands ahead of the Budget – keeping the already subdued property market at bay, Quotable Value says.

National property prices remain stable, rising 6.1 per cent in the year to April, compared with the same time last year, echoing a 6.1 per cent increase in the year to March.

The national average sales price for the three months to April fell slightly to $405,235 from $407,133 in March, sustaining a downward trend. Property values remain 3.9 per cent below their peak in late 2007.

QV spokeswoman Glenda Whitehead said buyers and sellers were weighing up their options, making for a relatively sluggish market.

"There is little urgency and many people are waiting to see the exact nature of the changes in the May Budget before deciding their next move."

The Budget announcement next week is expected to confirm an overhaul of the tax system, including cuts to the top personal rate and the closure of loopholes that let property investors offset their losses against other tax.

Property values in the Wellington region rose 7.1 per cent during the past year – up from 6.6 per cent in the year to March.

The average sales price rose slightly to $460,365 from $458,260.

The region's strongest increase was recorded in Lower Hutt – up 8.2 per cent in the year to April.

Wellington city and Porirua property values had risen 6.8 per cent and 6 per cent respectively.

Christchurch's average sale price in April was $367,688, down from $374,117 in March.

QV spokesman Pieter Geill said property values had bottomed out about this time last year – which made the annual figures look good – but the underlying trend could be a flattening off in values.

But buyers were definitely on the prowl in Wellington and the large buildup of listings was starting to clear, he said. The top end of the market was very active.

"It seems as if properties are selling faster than new listings coming to market, or perhaps even being withdrawn from sale and moved to the rental market."

Ms Whitehead said sales activity nationally in April was low, partly because both Easter and school holidays fell during the month.

"We are also seeing fewer properties being put on the market, which is also a normal trend for this time of year."

Activity could pick up in winter if the Budget gave people confidence, but probable interest rate rises in the middle of the year would keep pressure on borrowers. Property values rose steadily from May to November last year, meaning the annual change in values was likely to fall in the coming months.

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- BusinessDay.co.nz

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