February residential property market on the edge - REINZ
Wednesday 12 March 2008
The residential property market reached a 'tipping point' in February with the percentage annual growth rate on the verge of moving into negative figures, says the Real Estate Institute.
The national median price eased back from $340,000 in January to $337,500 in February, leaving it just 0.74% ahead of the February 2007 median of $335,000.
“Any further weakening of prices in March will see the market move into a negative percentage which has huge ramifications,” institute president Murray Cleland says. “If prices tip into reverse for the balance of this year that will have huge economic and political implications.”
“The wealth effect from housing is over,” agrees property market commentator Kieran Trass, who also warns the market is “heading over a cliff edge” now.
“The soft landing is over. We’re now at the end of the runway and still moving,” says Trass.
He says the market is at the beginning of a corrective phase and expects no value growth for five to six years. He sees the market heading into a four to five year slump until 2013 unless net migration changes.
Trass is recommending that people sell or hold in every suburb in Auckland, Wellington and Christchurch.
He says more than 50% of all suburbs evidenced value falls in the final quarter of 2007 – some by as much as 10%. Trass expects all suburbs to evidence value falls in 2008 – some by more than 10%.
Nationally, he predicts a 10-15% drop in values in the next two years, and says some suburbs could fall by up to 25%.
The traditional ‘investor’ suburbs will be hardest hit, says Trass, but the superior and inner city suburbs like Auckland’s Parnell and Ponsonby look sound. There, he thinks values will remain intact, or at worst drop by 5%.
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