Average prices in January are down 7.5% on a monthly basis to $517,613, however over the year they are up 8.9%.
An indication the market is deflating is the sharply rising stock of unsold homes.
Barfoot & Thompson says it ended the month with 6,173 listings on its books. Director Peter Thompson says that’s a higher than normal figure, but says it shows “there are plenty of willing vendors in the market but that they will need to be realistic about price expectations.”
Sharebroking firm Goldman Sachs JB Were says; “This suggests the market is failing to clear at recent high prices and that low net migration and very high mortgage rates are hampering demand,”
Given very soft demand for residential property and a lack of valuation support, the pressure on prices is to the downside over the year ahead. Given high household exposure to housing (86% of assets) and high gearing (170% of income), a deepening downturn in the housing market could have far reaching economic implications.
Barfoot and Thompson director Peter Thompson acknowledges there was a cooling in the market for the first month of the year, over and above the normal seasonal slow down, but he believes it will be another month or two before a clear picture emerges.
“It’s too early to make predictions about the state of the property market for the remainder of 2008, although we should have a clearer idea by the end of February where the market is likely to sit. Indications to date are that February is also slow, but we have to take into account the fact that school holidays have lasted a week longer than usual.”
While sales are slow there is good news for investors on the rental front. Barfoot & Thompson says January saw a sharp increase in average weekly rent from a 2007 average of $370 to $396 in January.
“This is the highest average weekly rent on record – the next highest month was October 2007 when the average was $388.”
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