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FALLING DOWN: July house sales hit a 10 year low, but prices in major centres were still up on last year.

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House sales fell to their lowest July in a decade but prices in the major centres were still up on last year.

The Real Estate Institute of New Zealand says property sales last month slipped to 4411, down from 4575 the month before but above the record low of 3666 last January. The peak for sales in July was 10,150 in 2003. 

Prices on the institute's new monthly housing price index also fell by 1.2 per cent from June.

The index, which is based on a methodology from the Reserve Bank, dropped to 3191.5 in July but were up 1.8 percent on a year ago.

REINZ spokesperson Peter Thompson said sales volumes were down but prices remained stable despite predictions of a falling market.

"Good sales are still being made and properties priced right are attracting a lot of attention and are selling."

Prices in the major centres were higher than they were a year ago, with Christchurch prices up 7.4 percent, Auckland up 1.7 percent, Wellington up 1.1 percent and other North Island suburbs up 2.2 percent.

The national median number of days to sell stayed at 45, compared to 37 days in July last year and 58 days two years ago.

Deutsche Bank chief economist Darren Gibbs said that after allowing for seasonal and trading day factors the number of house sales was virtually unchanged in July from a month earlier, and so remained at historically very low levels.

House prices now appeared to be heading lower, Mr Gibbs said.

Goldman Sachs economist Philip Borkin said the housing market was at best stuck in neutral and would remain that way for the foreseeable future.

While there were sound reasons to expect reasonable falls in house prices given the stretched fundamentals, there was a lack of triggers to drive such an outcome given that the labour market was improving, even if only modestly.

Recent falls in fixed mortgage rates were unlikely to provide a kick-start to activity in the near term. Rather they would have more of a stabilising influence, Mr Borkin said.

ASB economist Jane Turner expected house prices to fall around 3 percent during the next year.

REINZ spokesman Peter Thompson said the pattern was similar to last month with sales volumes down but prices remaining stable, contradicting predictions of a falling market.

"Good sales are still being made and properties priced right are attracting a lot of attention and are selling," Mr Thompson said.

- with NZPA

- © Fairfax NZ News