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NZ market 'to bloom'

Catherine Deshayes

Despite New Zealand shivering in the midst of their winter whilst over here in Blighty we bask in the sun - I don't remember ever writing that before - the country's property market looks to be thawing - with new research showing that stability is returning to the residential sector...

Last year, the New Zealand property market was looking bleak. Following a decade of year-on-year capital growth, average residential property prices fell by four per cent, according to the Real Estate Institute. Demand also fell by a whopping 60 per cent.

Around 70 per cent of New Zealand´s new wealth is invested in the country´s residential property sector, which is estimated to be worth in the region of £233 billion.

But now, things are looking up and industry bods are predicting that, come NZ springtime, a bounce could have returned to the market.

Property website Realestate.co.nz found that the residential property market in New Zealand was looking in far better shape in June. Stability was seen to be returning through the decline in new listings on the site.

A lower level of listings means that the number of available properties - measured in terms of the number of weeks of average sales it would take to clear the market - declined, falling to 31.5 weeks, a 37 per cent drop from the 50.2 weeks level of June 2008.

Listings had declined by 24 per cent compared to the same time last year and it was the fourth consecutive month there had been a drop.

As the market has been so stagnated of late, this new research has revealed a major turn around and signs are looking hopeful for future improvements in the sector.

Tony Alexander, Bank of New Zealand Chief Economist said that ‘some improvement is likely during 2009' and Realestate.co.nz Chief Executive Alistair Helm shares his optimism.

"Property sales were then at record low levels and the lack of buying interest meant available inventory had built up to over 52 weeks of average sales.

"With sales volumes on the rise but the stock of available properties reduced, it could mean that after the traditional quiet winter period the market could become very active in spring.

"It looks like by September this year we are likely to have a growing number of spring home buyers chasing a falling number of properties on the market.

"If the downward trend in inventory continues, at some point this could lead to price pressure creeping back into some pockets of the market. This has to be the eventual outcome.

"The long-held fears that we might see a fall of up to 30 per cent in house prices have proven to be unfounded. It is hard to predict, but I don't see any immediate signs of prices dropping any further," added Mr Helm.

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