Housing Market Continues Downward Trend

Housing Market Continues Downward Trend

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

“The nationwide PCI slipped further into negative territory last month and is now at its lowest level since March last year,” says Mike Pero Mortgages Chief Executive Shaun Riley.

“House sales activity was weak again in May, with sales volumes down 17 per cent from May last year.

“After falling in April, the median house price was down a further $6,000 in May. House prices are now up 3.7 per cent from May last year, which is the slowest growth rate since July 2009,” he says.

The Mike Pero Mortgages-Infometrics Property Cycle Indicator fell to a negative 3.71 in May, from -0.86 in April. 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, deteriorated from the same time last year.

“For the first time since March last year, houses spent longer on the market than in the same month the previous year. In May 2010, the average number of days to sell property was 43 days, compared to 42 days in May 2009.”

“All regions moved further into negative territory in May, with Auckland also having a negative PCI last month.”

Auckland moved into negative territory to -0.95 (down from 2.17 in April) and Wellington also lost ground, dropping to a PCI of -2.57 (from -0.12 in May).

In the South Island, Canterbury/Westland’s PCI dropped slightly to -490 (a decrease from -4.14 in April), as did Nelson/Marlborough’s, with a PCI of -4.55 (from -3.51). Otago also lost ground with a PCI of -671, down from -4.89 in April.

Rental inflation eased to 1.9 per cent per annum in May, which is weaker growth than in previous months, but still stronger than at any other time since the end of 2008.

Trends in mortgage rates were mixed in May, with one- and two-year fixed rates rising in anticipation of the Reserve Bank’s Official Cash Rate (OCR) increase. Three- and four-year rates were slightly lower as the wholesale yield curve flattened. Floating mortgage rates were steady at 6 per cent.

ENDS

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