Housing Market Continues to Ease Off

Housing Market Continues to Ease Off

The property market continued to deteriorate in March, according to the latest Mike Pero Mortgages-Infometrics Property Cycle Indicator (PCI).

“The nationwide PCI was still positive in March 2010, but it looks set to move into negative territory within the next month or two. This shows a definite continued easing off in the housing market,” says Mike Pero Mortgages Chief Executive Shaun Riley.

“Sales volumes in March were down 8 per cent from a year ago, as the strength of buyer demand continues to be determined by uncertainty about the tax treatment of investment property ahead of next month’s Government budget.

“However, the median house recovered to a new record high of $360,500, but the $10,500 jump from February’s result probably gives a false picture of the strength of the market. The March figure is likely to be a technical bounce-back from weak results in January and February. Prices tend to be the last of the three indicators in the PCI to turn around, so it’s expected these will also follow the deterioration in sales with a lag,” he says.

The Mike Pero Mortgages-Infometrics Property Cycle Indicator fell to a positive 1.61 in March, from 3.98 in February. The Property Cycle Indicator is a sensitive measure of the housing market and includes three main factors: changes in the number of houses sold; changes in price; and the time taken for houses to sell.

The third measure of the Property Cycle Indicator, the time taken for houses to sell, was down from the same time last year.

“At 35 days, the average number of days to sell property was down nine days from March last year.”

“A number of regions moved into negative territory in March, with the two main North Island cities losing ground, but managing to retain a positive PCI.”

Auckland dropped off to 3.95 (down from 5.80 in February) and Wellington also lost ground with a PCI of 1.91 (from 4.47 in February).

In the South Island, Canterbury/Westland’s PCI moved into the negatives with a PCI of -2.06 (a decrease from 0.37 in February) as did Nelson/Marlborough’s, with a PCI of -1.55 (from 0.60). Otago also lost ground with a PCI of -2.49, down from 0.14 in February.

Rents in March were up 2.8 per cent from a year earlier, which was weaker than the growth in February, but better than any other month since November 2008.

Floating mortgage rates held steady at 6.0 per cent for the sixth consecutive month. Fixed mortgage rates were slightly lower across the board, as expectations of the first interest rate rise by the Reserve Bank were pushed back.

ENDS

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