12 May 2009
With both volume and median sale price of houses changing this month, economists are saying the property market — a leading indicator of the whole New Zealand economy — is slowly improving.
The median house price fell 1.4 percent to $340,000 in April from a year earlier, although it continued the slow recovery seen in recent months, the Real Estate Institute of New Zealand (REINZ) said today.
The number of houses sold was up nearly 40 percent on last April, though turnover fell 7 percent from March to 6210.
T his slow turn-around was the market responding to the very low interest rates being offered, Deutsche Bank spokesman Darren Gibbs said.
However, he wondered if the recovery would progress further in 2009, given the general weakness of the rest of the economy — though the bank was expecting a five percent month-on-month rise for May, he said.
“This is consistent with our view that the economy will return to positive GDP growth in the final quarter of this year, provided that global economic and financial conditions stabilise ,” Mr Gibbs said.
With increased, “pent up” demand, met by a similarly withheld supply, the economist expected prices to be a little lower than recorded this month, before stabilising next year.
Goldman Sachs strategist Bernard Doyle said house sales were a reliable leading indicator for the domestic economy.
Also, the sales figures hinted at a possible imminent construction boom, he said.
“When NZ was last turning over 6500 houses per month, new construction was running at 24,000 consents annualised, versus 12,000 currently,” he said.
The rebounding activity strengthened Goldman Sachs’s opinion domestic demand will increase through the second half of 2009, he said.
The median house price rose 1.5 percent from March, and was also higher than February’s $330,000, REINZ president Mike Elford said.
The median price dropped in most regions aside from Taranaki, where it rose slightly to $270,000, and Waikato/Bay of Plenty, where it was unchanged.
April was traditionally a slower month due to school holidays and seasonal adjustments, Mr Elford said.
“The figures are not hugely significant, but enough to generate a degree of optimism about the way forward from here,”
The median of 42 days to sell a house in April improved slightly on the 44 days it took in March and in April 2008, and significantly from February’s 55 days.
House sales continued to be strongest in the under $400,000 price bracket, accounting for nearly 4000 of the total April sales.