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Bayleys Research


MARCH BULLETIN 2008

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THE SLOWDOWN CONTINUES

For the second successive month, the Real Estate Institute of New Zealand (REINZ) recorded a decline in national median sale price for residential dwellings. New Zealand’s national sale price median was $340,000 for January 2008. This is down $5,000, or 1.4% over the month from the close of 2007.

It appears that people have been sitting on their hands over the last couple of months, with sales volumes being the lowest yet since the end of 2004. The number of transactions reported to REINZ in January this year didn’t quite reach 5,200 sales. While it is typical for January to be a slow month in terms of transaction volumes, this is 2,380 (31%) fewer sales than we observed in January 2007.

Another litmus test as to the state of the residential market is the period of time it takes to sell a house. According to REINZ, this averaged about four and a half weeks throughout 2007. Dwelling sales completed in January took an average of seven weeks to sell, which again, is the longest period observed since late 2003.

 

 

According to the Reserve Bank of New Zealand (RBNZ), we have a total $143 billion in mortgages with 87% of these on a fixed rate. Over the next 12 months, 33% of those fixed rate mortgages will roll off their term, during which they paid an average of 8.09%, to the current interest rates – Westpac are offering 10.69% floating or 9.50% fixed for two years (at time of writing).

However, over the last 12 months New Zealanders have experienced strong wage growth (4.1% for 2007, StatsNZ) and unemployment is the lowest ever recorded in New Zealand (3.4% for December 2007 quarter, StatsNZ), so hopefully those who are rolling off their fixed-rate mortgages should be sufficiently prepared to deal with the increased rate. As with any market, those who have bought at the top and are forced to sell during a corrective phase will be the hardest hit.

 

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