Tax, job concerns depress house sales

The housing market is still weak, with extremely low sales volumes and more listings as buyers are put off by expected property tax changes in the Budget and worries about job prospects, economists say.

ANZ economist said the low house sales volumes suggested building consents and construction would not pick up much and flat house prices for the past five months would keep a lid on consumer spending.

House prices nudged up slightly in February, rising by 0.4 per cent according to the Real Estate Institute's house price index.

However, prices were down 1.2 per cent in the three months to February. Some economists said there was usually a price lift in February, so accounting for that trend, prices were down about 1 per cent.

The market has been weak for the past five months, with prices flat since October. ASB Bank economist Jane Turner said the momentum in the housing market was starting to fade. The increasing stock of homes on the market should see house prices "ease" this year after last year's price rebound.

The REINZ February figures also show house sales volumes in February rebounded from their lowest levels in 20 years seen in January. February is usually the third-highest sales month and some in the real estate sector said the figures were surprisingly low.

Realestate website chief executive Alistair Helm said 5000 sales in February was "not bright news". If the inventory of unsold houses continued to rise at present levels, it could take a year just to clear existing stock he said. Buyers were holding back, worried about the job market and expected property tax changes, as well as higher fixed term mortgage interest rates, ANZ said.

While house sales were up from January, volumes were still down more than 11 per cent from December levels, ANZ Bank said. The average days to sell were up to 46, or 39 days after seasonal adjustment. That was the highest level since the middle of last year, ANZ said.

Deutsche Bank chief economist Darren Gibbs said the level of sales remained "extremely low" and the number of listings was rising.

Deutsche Bank estimated that seasonally adjusted volumes were down 2 per cent in February. That was not as bad as the 6 per cent or more falls in volumes in the previous four months he said.

Sales were also down 4 per cent on the same month last year.

The housing market was being held back by the lack of a recovery in the broader economy, Mr Gibbs said, especially the lack of new jobs.

- © Fairfax NZ News