Median house price rises in October: REINZ

New Zealand’s median house price rose in October, suggesting the impact of the property downturn isn’t as deep as had been feared.

Thursday, November 13th 2008, 8:40PM

by The Landlord

The median price rose to $335,000 last month, from $330,000 in September, according to the Real Estate Institute. Prices declined 4.28% from the same month of 2007.

The figures belie predictions of a 30% slump in property prices in the past 12 months, according to institute vice president Peter McDonald. “Despite predictions of gloom and doom” the latest month points to “a rosier picture,” he said. “People’s confidence in real estate is returning.”

Prices rose from a year earlier in five of New Zealand’s 12 regions, according to the report. The rate of sale fell to 47 days from 52 days in the previous month. Still, the number of sales fell to 4,469 from 6,854 in October 2007.

The central bank is poised to cut the official cash rate by at least 50 basis points next month, extending the deepest easing cycle since the OCR was introduced in 1999. The economy is lurching through its first recession since 1998 and some economists say growth may not revive until 2009.

ASB describes the housing data as “a mixed result.”

“While turnover remains weak at very low levels, the median house price and the median number of days to sell showed some slight improvement.”

It says it’s not too surprising to see that housing demand remained weak, due to the global credit crisis and economic uncertainty.

The bank notes there was a slight increase in the median house price, and makes greater comment that the median number of days fell from 51 to 56 implying some improvement in the housing market

“The number of days to sell is generally a fairly reliable barometer of the balance between supply and demand in the housing market, and the fall is consistent with an improvement in prices.”
Overall thought it describes the housing market as being “in a very weak state and will be a long way off recovery.”

“The fall in days to sell is a bit surprising, but remains very high levels. We remain of the view there is excess supply of housing on the market, and we expect house prices to continue falling over the rest of the year.”

It says the fall in mortgage rates will help the housing market at the margin. However, it expects overall demand for housing to remain weak with slow population growth, slowing economic outlook and deteriorating labour market continuing to weigh on housing market sentiment.

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