House prices hit low as prices snag

House prices are still falling, down 2.6 percent last month, and economists estimate that the volumes of sales dropped 8 percent to a record low.

January is always a quiet month for house sales because of summer holidays, but economists said the figures showed the market was "very weak".

It was still a buyers' market and prices could remain soft for months, some economists said, reinforcing expectations that official interest rates would remain low till September.

Rental property shortages are partiy to blame for soggy house sales last month and the lowest monthly number of new listings so far, according to the Real Estate Institute, Reinz.

The institute's monthly housing price index was also down 2.6 percent in January compared with 12 months ago.

The national median price last month was $340,000, $10,000 lower than January 2010.

House prices are now 7.7 percent below the market's November 2007 peak.

Sales volumes fell to 3252, below the previous January low of 3666 a year earlier. New listings fell to a record low of 8300. Six years ago, during the property boom, more than 8000 homes were sold each month.

According to the index, Wellington house prices fell 3.3 percent on a year ago. The median price for Wellington district slipped back to $370,000.

Reinz chief executive Helen Sullivan said though January was a traditionally subdued month, low interest rates and rental shortages in some urban areas such as Auckland, meant "homeowners and investors alike are under no pressure to sell".

However, the low level of building consents should in turn "provide support for prices over the coming 12 months, and perhaps an opportunity for the would-be investor".

- © Fairfax NZ News