Property Market Edges up

The property market crept up very slightly in the month of December, according to the latest Mike Pero Mortgages-Infometrics Property Cycle Indicator (PCI).

“The nationwide PCI edged up in December to -9.71, from its lowest possible of -10, where it had been for the previous three months,” says Mike Pero Mortgages Chief Executive Shaun Riley.

“This tells us the property market is still in downturn, but the momentum in the downswing moderated slightly over the past month,” he says.

The Mike Pero Mortgages-Infometrics Property Cycle Indicator last year fell to a negative 10.0 in September and stayed there until December. The PCI is a sensitive measure of the housing market and includes three major factors – changes in the number of houses sold, changes in price and the time taken for houses to sell.

Separating out those three factors, Mr Riley says the data shows sales activity appears to be improving from the very weak results recorded in previous months, with sales volumes in December 11% lower than at the end of 2009.

“However, after a more positive figure in November, the median house price slipped back in December to $352,000. That’s down $8000 on the previous month, a 2.2% fall from a year earlier and the worst result since March 2009.”

Rents in December were 3.1 % higher than a year earlier and floating mortgage rates held at 6.4% for the fifth consecutive month, with fixed mortgages virtually unchanged as well.

The final factor – time taken for houses to sell – shows property took an average of 39 days to sell in December, virtually unchanged from the November result.

Background information
• The Property Cycle Indicator is prepared from an analysis of changes in house sales, price movements, and the time taken for properties to sell
• The monthly data is sourced from the Real Institute of New Zealand
• The Property Cycle Indicator runs from minus-10 to plus-10
• A Property Cycle Indicator value of -10 shows a strong downturn, while +10 shows a strong upturn in the housing market
• Lower sales volumes are usually the first indicator that a market upturn is coming to an end, followed by properties taking longer to sell
• House prices are usually the last variable to change direction
• House prices may still be rising, even though the Property Cycle Index is negative and showing a downturn
By incorporating the three variables, the Property Cycle Indicator gives a much better, and earlier, indication of shifts in the market.

ENDS

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