Housing Market Steady In September Quarter

MEDIA RELEASE: 10 NOVEMBER 2006

Housing Market Steady In September Quarter

The housing market steadied in the September quarter compared with the previous three-month quarter, with the national market entering the third quarter of a downturn.

The Mike Pero Mortgages-Infometrics Property Cycle Indicator (PCI) was minus 5.9 for the September quarter, slightly higher than the minus 6.86 (revised) recorded during the June quarter. The PCI provides a number between minus 10 and plus 10 depending on the state of the market.

“Most areas throughout New Zealand recorded a rise in their PCI in the September quarter,” says Jeff Staniland, Chief Executive of Mike Pero Mortgages.

Nelson/Marlborough was the best performing region with a positive PCI of 2.01 in the September quarter, following a string of negative PCI numbers.

Wellington, however, slipped from slightly positive to into the negative (minus 4.62) on the PCI.

The national median time for a house to sell improved slightly in the September quarter compared with the June quarter, but is still four or five days longer than a year earlier.

National sales volume has stabilised around 100,000 properties per year, but the September quarter figure was still 3.5 percent lower than a year earlier.

House-price inflation also eased to 8.7 percent, a three-year low.

“There are many mortgage holders who are having to renew their relatively low fixed rates set a couple of years ago. Rising wholesale rates are limiting the banks’ ability to reduce interest rates to the levels seen a couple of years ago, although the Reserve Bank’s decision to leave the official cash rate at 7.25 percent in October has eased the upward pressure on rates.”

“House price inflation is expected to continue to slow over the coming year, but a national fall in house prices is not likely given the tight labour market and the ability of householders to service their debt,” says Jeff Staniland.

Summary of the main markets
Auckland: some improvement in July and August although that did not carry through to September. Annual house price inflation eased to 5.8 percent; sales growth was similar to the June quarter; while houses were only taking two days longer to sell than a year ago, compared with a six-day gap in the June quarter.

Wellington: June’s early signs of a slowdown gathered pace, with PCI dipping into the negative following four positive quarters. House price inflation eased to 11 percent (15 percent in May) and the mid-year burst of sales has not continued.

Canterbury recorded its ninth straight negative PCI and house price inflation slipped to 6.8 percent, its lowest level since early 2003. Sales growth was also negative with houses staying on the market for the longest time in three years.

Weblink: www.infometricsproperty.co.nz

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