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NZ: Lots of houses...not enough buyers

Tuesday, March 16, 2010

Source: Catherine Deshayes

New Zealand is awash with unsold houses which could take nearly a year to clear, it has been revealed.

The Institute of Economic Research's principal economist, Shamubeel Eaqub, said Real Estate Institute figures out yesterday showed the market had weakened considerably and he noted extremely low turnover - 5029 sales nationally last month compared with 10,145 in February 2005.

"According to realestate.co.nz there were 54,381 homes for sale in February. There were 5029 sales in February - at that rate it will take 11 months to clear the current inventory."

Last year, the market had seven to eight months of inventory. "Sales are stuck at very low levels and the market is awash with unsold homes," Mr Eaqub said.
The market's poor state was also reflected in days-to-sell rising from 34 days in mid-2009 to 39 days last month on a seasonally adjusted basis, he said.
REINZ figures showed the national sale price static at $350,000 from January to February and down $10,000 from December's $360,000.

Auckland's median rose by $3500 in the month from $450,000 to $453,000 but has now fallen below November's $470,000. Agents sold 1578 Auckland houses last month, below November's 2192 when REINZ said the market had recovered.

Prices in the Glendowie, Kohimarama, Meadowbank, Mission Bay, Orakei, Parnell, Remuera, St Heliers, St Johns areas fell from December's $820,000 median to $730,000 last month.

Mt Albert's $610,000 December median fell to $475,000 in January but recovered to $541,000 last month. Takapuna/Milford's January $502,000 median rose to $650,000 and Devonport's $745,000 was up to $800,000.

Mr Eaqub said the national picture was clouded by a small turnover, meaning median prices were not a reliable indicator.

"Valuations are stretched and there is risk of a downward correction," he said. "The weak level of home sales reflects the lagging effects of rising mortgage rates. Policy uncertainty may also be discouraging activity.

"Housing is also a very good barometer of the economy. The current depressed level of home sales suggests the economy is not yet out of the woods and the real estate industry is not in a pretty shape."

Alastair Helm, chief executive of realestate.co.nz, which is half-owned by REINZ, noted a big upturn in new listings.

The website had just got about 5000 new listings and if this continued, it could have 15,000 new listings by the end of this month, he said.

Source: www.nzherald.co.nz