House sales and prices stabilising

Deutsche Bank economist Darren Gibbs thinks the level of sales is insufficient to clear new listings and the median number of days to sell a house is rising. As a result, house prices have stabilised over the past six months, he says.

The bank’s October report shows sales rose 16.3% month on month (mom) in October but fell 22.6% year on year. “We estimate that sales rose 3% mom in October after rising 1% mom in September. The modest rebound in sales was more notable in Auckland than in the remainder of the country,” says Gibbs.

The current level of turnover remains below the historical average by around 20%.

The raw ‘median days-to-sell’ statistic rose two days to 34 days in October. Gibbs estimates that the median days-to-sell stood at 36.5 days – a level not seen mid 2002, but still below the historical average of 40 days.

“But as we have noted before, if sales activity remains at around recent levels we would expect this statistic to rise substantially further over coming months,” he says.

The median sales price fell $1500 (or 0.4% mom) to $350,000 in October. However, prices have been essentially unchanged since April. “The sharp fall in sales and the foreshadowed rise in the median days-to-sell are consistent with a substantial easing in pressure on prices,” Gibbs says.