The residential property market in January was denoted by very low sales and a sharp increase in days to sell figures.
Wednesday, February 13th 2008, 1:06PM
by The Landlord
Even taking the holiday period into account, sales were unusually low at 5186, which is the lowest level since January 2001.
It is also a significant decline compared with 7566 sales in January 2007 and 5597 in December 2007.
Days to sell climbed to 49 days nationally, the highest since the January 2002 figure of 54 days.
Days to sell in January 2007 were 38 and December 2007’s figure was 36.
The national median price dropped from $345,000 in December to $340,000 in January, compared to the peak price of $352,000 in November 2007.
REINZ president Murray Cleland says the latest figures suggest prices are going backwards, and it is a buyer’s market.
Prices falling in 2008 may have consequences for those that are heavily geared, Cleland says, especially those with multiple rental properties in that situation, at a time of rising interest rates.
Deutsche Bank chief economist Darren Gibbs thinks prices will fall by 5%, which could hurt highly leveraged investors who bought at the top of the boom, but will not prompt the Reserve Bank to cut interest rates. He says those who bought last year and borrowed all or most of the purchase price could have a problem as prices fall.
Gibbs says we could see more mortgagee sales and bankruptcies this year; however investors who bought earlier in the boom should be all right as they have already benefited from good value growth.
The Auckland region median price plummeted from $460,000 in December to $432,750 in January, caused mainly by a fall in the Auckland City median from $510,000 in December to $433,000 in January. Cleland says this is likely to be a skewing of figures caused by the low sales volumes.
