Sales of homes slow in capital

Wellington's housing market is the puny weakling of the main cities, according to the latest real estate statistics.

Real Estate Institute (Reinz) figures, issued yesterday, show the median price for the region fell by $5000, or 1.3 per cent, in July, compared with June, with the largest falls being 12 per cent in the Hutt Valley and 9 per cent in central Wellington.

Compared with July 2013, the median price dropped $10,000, or 2.6 per cent, to $380,000, with western and southern Wellington seeing declines of more than 10 per cent.

Eastern Wellington bucked the trend, rising 18 per cent to $560,000.

The national median price was $416,000 for July, an increase of $31,000, or 8.1 per cent, on July 2013. However, the increase was driven almost entirely by the markets in Auckland and Christchurch.

Sales volumes in Wellington were up 1.3 per cent (621 sales) over the same month last year.

The national Stratified Housing Price Index, which adjusts for some of the variations in the mix, is 5.9 per cent higher than in July 2013. The Auckland index has risen 12.2 per cent over that time, and the Christchurch index 13.9 per cent.

In contrast, the Wellington index was down 2.3 per cent.

Harcourts managing director Marty Scott said higher interest rates, winter weather, the high loan-to-value ratio restrictions (LVR), and the looming general election all dampened the market and had an impact.

"I wouldn't say it was a perfect storm, but it is windy and wild out there. But there are no surprises in the figures."

Institute director Euon Murrell said first-home buyers and investors "are few and far between across Wellington with the flow-on effect to open home attendances".

"Further, the number of listings coming to market is falling and existing listings in some categories are not moving."

The Reinz figures show July's nationwide house sales volumes increased 2.3 per cent from June but were down 13 per cent from a year ago.

Annette Beacher, TD Securities head of Asia Pacific research, said home sales peaked well over a year ago, and price increases peaked at 9.9 per cent a year last October.

The subsequent cooling in the housing market was what the Reserve Bank intended when it introduced the LVR restrictions in October 2013.

She expected it to end the LVR restrictions by the end of the year, rather than back away from rising interest rates.

The Dominion Post