Grim news in Auckland property market

House sales in Auckland, as recorded by its largest real estate agency, have plummeted, but prices have held up.

Friday, April 4th 2008, 8:00PM

by The Landlord

Barfoot and Thompson says house sales in March are down 56% on the previous year, with just 632 sales, compared to 1,444 for March 2007.

However, prices, on a monthly basis are up slightly. The average sale price for Auckland property increased more than 5% last month The average sale price for March was $522,336, compared to $495,272 in the previous month.

The reality though is that prices are volatile and are down 7.4%on a year-on-year basis. This is the lowest since September 2001.

Part of the reason for the fall has been attributed to Easter falling in March, but that is only one part of the picture. According to Goldman Sachs JB Were these figures show “the housing downturn is in full flight.

It suggests there is plenty more to go and “prices need to fall by 15% to45% to return to fair value, depending on valuation metric used.”

New listings slowed and there is now plenty of inventory hanging over the market. One of the measures economists use is how long it would take to sell the current listings. Previously the numbers was down around 3.8 months, but now it is up to 10.2 months.

Barfoot and Thompson says it “ended the month with high stock levels”. It had 7,379 properties on its books at the close of March, compared to a monthly average of 4,817 for the whole of 2007.

The news on the rental front was more positive. The average weekly rent was up $9 in the past month from $382 to sit at $391.

“This is a likely reflection of landlords passing on interest rate rises and other increased costs to tenants,” Thompson says.

Barfoot & Thompson let 622 houses and units in March, compared to 714 in February and 748 in January.

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